Wednesday, December 14, 2016

The u.s. central bank raises rates for the first time in a year, Le Figaro

The u.s. central bank has pointed out, this Wednesday, its key interest rate by a quarter of a percentage point, as expected the financial markets.

The Fed could hardly afford the luxury of taking the markets against the foot. As expected therefore, the us central bank announced, on Wednesday evening, a slight increase of the main interest rate. The last increase dates back to the same time last year. Then, it was the first step of the federal Reserve to abandon its policy of ultrastimulante rate near-zero, in place since the end of 2008.

The fed funds rate”, in which the Fed allows banks to refinance themselves in the very short term, then passes a range between 0.25 and 0.50% to a range between 0.50 and 0.75%. Three further increases are now expected for 2017, which has surprised the foreign exchange markets and boosted the dollar. “It is a vote of confidence in the economy,” says Janet Yellen, the boss of the Fed, which also recognizes that Donald Trump could not renew his mandate when it expires in early 2018.

disappointing performance of the u.s. economy in the first half so far had deterred the Fed from implementing its original intentions more gradual increases in rates in 2016. However, the acceleration of growth to over 3% annual rate in the third quarter, as well as the continued hiring of strong levels while unemployment fell to 4.6%, spurred him to act.

promises of tax cuts and increased infrastructure expenditures made by Donald Trump for 2017 and 2018, and the risk of acceleration of inflation that they involve, could only prod the Fed to act. The future president of the United States claims that its tax reforms, deregulation and its plan of action to combat relocation can “double the pace of growth of the economy”, today estimated at between 2% and 3%.


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