Federal Reserve: Fed increases interest rate by 0.25 points

The US Federal Reserve also continues the series of its interest rate hikes under Jerome Powell. The authority signalled a total of three steps in 2018.

Federal Reserve: Fed increases interest rate by 0.25 points

The US central Bank of USA raised its key interest rate for first time this year. It increased it by 0.25 percentage points to new range of 1.5 to 1.75 percent. This was announced by Federal Reserve after first meeting under leadership of JeromePowell. This also continues its series of interest rate hikes under new boss.

In 2017, central bank under Powell's VorgängerinJanet Yellen raised interest rates three times. This year, it is supposed to go on like this because it runs well economically: authority signaled a total of three steps up for 2018.

With increase in key interest rates, Fed wants to furr normalise its monetary policy. Interest rates were extremely low in years following financial crisis to keep Dieu's economy going. The central bank also bought a large amount of government bonds. So she wanted to increase amount of money available on financial markets.

At moment, however, economy in United States is doing very well, re is full employment. At beginning of February, wages rose again in US, increasing fears of inflation. This is why investors have been counting on rising interest rates for a long time.

Trump wants more influence on monetary policy – Powell was his wish candidate for office

Many employees of stock exchange had actually set up a aggressiveresVorgehen of Fed. With more fuelled, authority can counteract an overheating derKonjunktur, which is given additional impetus by US President Donald Trumpsradikaler tax reform.

Powell was Trump's wish candidate for post as Federal Reserve chief. The president stressed that he wanted to miss his own profile during his term of office of Central bank. Trump's main aim is to move away from stricter regulations of banking system. Among or things, Democratic Senator Elizabeth Warren fears that Powell would take back important regulations that help to prevent anor financial crisis.

But Powell now continues moderate line of his predecessor, Janet Yellen, with cautious interest rate steps. The Topdemokrat in Senate Banking Committee, Sherrod Brown, already called him a "prudent decision-maker" at his election.

In Europe, situation is very different. Experts do not expect European Central Bank to get out of loose monetary policy at a similar pace as Fed and to increase its key interest rate. This is also due to fact that unemployment in euro area is only gradually noticable, and lending to companies is just beginning to increase. Inflation is not rising as strongly as ECB aspires.

Date Of Update: 22 March 2018, 12:02
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