United States not on 'cusp' of accelerating inflation: Fed Chair

22 March, 2018, 02:00 | Author: Salvatore Jensen
  • EURUSD Daily

But U.S. wage growth has remained sluggish and household budgets are tight.

"The economic outlook has strengthened in recent months", the statement said.

Federal Reserve Chair Jerome "Jay" Powell also sounded a warning about rising trade tensions.

"Trade policy has become a concern going forward for that group", he says, referring to business leaders.

Now the Fed holds four press conferences a year, following meetings when they issue their quarterly economic projections.

The vote to raise rates was unanimous, 8-0. "Job gains have been strong in recent months, and the unemployment rate has stayed low".

The Dow Jones Industrial Average fell 28.09 points, or 0.11 percent, to 24,699.18, the S&P 500 lost 3.47 points, or 0.13 percent, to 2,713.47 and the Nasdaq Composite dropped 7.34 points, or 0.1 percent, to 7,356.96.

Taken together, the Fed's actions and forecasts Wednesday suggest a belief that the economy remains sturdy even almost nine years after the Great Recession ended.

Ahead of the Fed announcement, 2-year Treasury note yields, which are highly sensitive to Fed policy expectations, hit their highest in more than nine years on Wednesday morning at 2.35 percent. With growth picking up and unemployment low, policymakers expect core inflation - which excludes the food and energy categories - to rise 2.1 percent in 2019 and 2020. On a 12-month basis, both overall inflation and inflation for items other than food and energy have continued to run below 2 percent.




“Jay Powell is nearly certain to announce a rate hike today of 25bp, taking the Fed Funds target rate from its current 1.25 per cent to 1.5 per cent up to a new range of 1.5 per cent to 1.75 per cent. Markets will not respond to the hike per se, since it has been widely anticipated. "But, this now being the sixth interest rate hike, the cumulative effect since December 2015 is that a $30,000 home equity line now carries a minimum payment that is $37 a month higher", McBride said. Some economists expected the Fed would signal a fourth hike this year.

In its first policy meeting under new Fed chief Jerome Powell, the US central bank said inflation should move higher amid a stronger economy after years below its 2 percent target.

The Federal Reserve announcement is scheduled for 2 p.m. ET. Prior to that, the central bank held rates near zero for seven years to encourage borrowing and spending and help support the recovery from the Great Recession.

The reason for their cautious approach to raising interest rates is stubbornly low inflation.

The Fed on Wednesday boosted its key short-term rate by a modest quarter-point to a still-low range of 1.5 percent to 1.75 percent and said it will keep shrinking its bond portfolio.

The policy move leaves central bankers with room to assess whether they will need to raise rates faster to prevent the economy from overheating.

It's also the first Fed meeting since Jerome Powell took over as chairman, although so far Powell hasn't made any major breaks with the policies of predecessor Janet Yellen.

Though this will be his first news conference as Fed chairman, Powell has already faced tough questioning during two days of congressional hearings in February and March.

Powell then commented on the strength of the economy and projections for future rate increases as inflation remains below the Fed's target of 2% despite a host of strengthening signs in the labor market.

Recommended:



Popular

Maduro comes out against Trump sanctioning 'Petro' currency
The government has promised that Venezuelans will be able to use the $60 coins to pay taxes and for public services. USA calls the digital currency an attempt by the Venezuelan government to "circumvent United States sanctions ".

Trump congratulates Putin on re-election, gets slammed
White House press secretary Sarah Huckabee Sanders confirmed Trump spoke with Putin yesterday morning. The UK government blamed the nerve agent attack on Russian Federation , which denies any involvement.

Will Daniel Bryan's Return Impact WrestleMania 34?
Since then Bryan has tried to get himself cleared, visiting numerous doctors whilst performing a non wrestling role for WWE . Bryan has been out of action for more than two years, dealing with the lingering effects of multiple concussions.

Former NFLers involved in league to rival XFL
One difference between Allliance games and the National Football League is that kickoffs will be eliminated, NBC Sports said. Live fantasy play will be integrated into app broadcasts to tap into the 20 million people who now play fantasy football.

Juan Martin del Potro over the moon after beating Federer
Meanwhile, Federer remained in the number one spot in the singles rankings with 9,660 points. Annabel Croft reflects on stunning Indian Wells win for big serving Argentine.

Egyptian giants hand Mohamed Salah honorary club membership
File image of Mohamed Salah . "You know when you are walking out there are so many goals out there for you". Roberto Firmino has 23 goals in all competitions, with 14 of those coming in the Premier League .

A Self-Driving Uber Hit and Killed a Woman in Arizona
Authorities have not yet released the victim's identity and her next of kin has not yet been notified, the Temple PD said. Uber was only using autonomous vehicles as part of its regular passenger service in Pittsburgh and Tempe .

Cambridge Analytica: Warrant sought to inspect company
Alphabet, Google's parent company, lost nearly 3 percent and Microsoft fell nearly 2 percent. Wylie says he doesn't know to what extent Trump's campaign used the techniques.

Trump Orders Sanctions Against Venezuela's Crypto
Mnuchin met with other finance ministers on Monday at the G20 conference in Buenos Aires to discuss the situation in Venezuela . The country holds a " petro " cryptocurrency that is even controversial within its own countries' government.

Jim Carrey Shares 'Monstrous' Painting of Sarah Sanders
After stepping away from acting for the most part over the past few years, Jim Carrey has turned to another creative outlet. After sharing the sketch online, Carrey was met by a backlash from right-wing figures on both social media and Fox News.