On Wednesday, the U.S. Federal Reserve raised interest rates and also suggested a faster pace of increases in 2017 as central bankers aim to intertwine comprehensive policies with the incumbent Trump administration’s vows of tax cuts, spending and deregulation.
The Federal Reserve hiked the interest rates by 0.25%. In a news conference post the rate decision, Fed Chair Janet Yellen said,”Donald Trump’s election had put the central bank under a‘bubble of uncertainty’ and already prompted some policymakers to shift their view of what’s to come”.
She added,
[themify_quote]”All the (Federal Open Market Committee) participants recognize that there is considerable uncertainty about how economic policies may change and what effect they may have on the economy.”[/themify_quote]
Yellen said few of the participants had begun shifting their assumptions about fiscal policy. At least five of 17 Fed policymakers have apparently boosted their perspective on interest rate since September.
“I am not going to offer the incoming president advice about how to conduct himself,” Yellen bluntly stated.
Foreign currency dealers said that the effect of the news could only be comprehensively assessed after the European markets absorb the rates.
Markets and the Fed appeared to be close on their rate outlooks, with Fed futures markets pricing in at least two and possibly three hikes in 2017.
The U.S dollar reached an upper trend, in the Asia trading. The Yen however, was the hardest hit. Fed announced it’s 2016 maiden interest rate increase. It also suggested more hikes in 2017. She signaled that these hikes will be at a relatively rapid rate.
Fed officials said they would increase the federal-funds rate by a quarter percentage point to between 0.50% and 0.75%.
There has been massive turbulence for a long time now. Starting from the BREXIT event followed by the Tata-Mistry clash, upstaged by the Demonetisation, as reported, the biggest move in the history of any economy and now the interest hike by FED. The stock market lifeline has been treading over a bumpy road ever since June2016 and is likely to continue till 2017 commences.
