Wednesday, 26 September 2018

America's central bank hikes key rate for third time this year

America's central bank has hiked its key interest rate for the third time this year and stuck with its forecasts for several further increases in coming months.
The US Federal Reserve increased its short-term rate by a quarter of a percentage point to a range of 2%-2.25%, the eighth increase since late 2015.
Its decision was widely expected and sees the Fed continue its path of gradually lifting borrowing costs to more normal levels after they were slashed close to zero during the financial crisis.

A statement announcing the increase was seen as marking the end of the era of low rates - dropping a reference to "accommodative" from its description of monetary policy.

The increases come in response to a strengthening US economy and despite Donald Trump's recent complaint that he was "not thrilled" with the Fed's hikes under its chair Jerome Powell - the president's own pick to lead the body.

The Fed's rate-setting committee said that latest indicators showed "that the labour market has continued to strengthen and that economic activity has been rising at a strong rate".
At the same time as the US has seen rates rise, in the UK and the eurozone they have remained around the ultra-low levels to which they were slashed during the crisis.

In America, the Fed is now forecasting a further rate hike before the year's end and three more in 2019, plus another in 2020.

SKY     News.

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