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  • Heng Kim
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  • Last Posted: 2017-05-27 02:00:07
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More Rate Rises about to Come, Fed Says

2017-03-31 11:53:17

The Federal Reserve stressed the market is prepared enough to face additional interest rate hikes.

Based on the minutes of its last gathering, several Fed policymakers implied another rate rise would possibly come to offset the peril of an overheated economy. It said various officials believe it might be suitable to hike rates again provided inflation and jobs report are conforming to or firmer than the central bank’s projections.

Fed officials stated slowly increasing the funds would enable them greater flexibility in dealing with succeeding changes in economic situations, which could come with an about-face in soaring US equity prices, which is currently observed by them.

It also highlighted the substantial uncertainty among officials as they await how changes in the Trump government’s economic strategies would influence the overall economic view as well as the timing and extent of these modifications.

President Donald Trump previously unveiled his plan to enforce tax reductions and scale down financial regulations, while likely higher infrastructure spending and fresh taxes on imports could bolster inflation. Policymakers pointed out both advantages and disadvantages of these policies to the economy, with the majority of them saying it would possibly be needed to attain a brighter economic view.

The Fed has managed to increase interest rates twice since 2006. It has been grappling with different challenges since the global financial crisis as the rates were slashed to almost zero.

Speaking to legislators, Fed Chair Janet Yellen mentioned delaying rate increases further would be an unsound decision. She indicated the country’s monetary authority is still on course to mull rate hike by summer. Fed Governor Jerome Powell backed Yellen’s comments, saying a rate increase would be discussed at the central bank’s next gathering in March.

The Fed’s upbeat remarks come in the advent of strong economic data, specifically inflation data. January’s inflation report stated consumer prices gained 0.6% month-over-month and 2.5% year-over-year, which are multi-year peaks.