US Fed raises rates for second time in three months

US Fed raises rates for second time in three months

The major indices in the Indian markets are trading fairly higher and it seems rate hike by Fed has not had much of an impact on the Indian bourses.

The US Federal Reserve lowered its forecast for inflation but raised its prediction for growth, opening the door for further rates hikes in 2017.

Those factors mean the Fed's preferred inflation measure will remain below the two percent target for some time, but will gradually rise to the target level over "the medium term".

That helped to lift yields on United States two-year notes from their lows of the day.

"Today, the Federal Open Market Committee made a decision to raise the target range for the federal funds rate by a quarter of a percentage point, bringing it to one to one and a quarter percent".

In her press conference after the announcement, Fed Chair Janet Yellen asserted that USA economic growth appears to have rebounded enough to justify both higher rates and a return of Fed-held assets to the wider market.

Your credit card issuer or home equity lender is about to bump up your interest rate again, as Federal Reserve Board Chair Janet Yellen and her colleagues have raised a key short-term rate for the third time since December.

According to an addendum released with the policy statement, the Fed anticipates that the balance sheet reduction plan would feature halting reinvestments of ever-larger amounts of maturing securities.

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The euro was down 0.3 percent at $1.1183, a six-day low, while the yen was flat at 109.58 per dollar.

"Asset sales would be deferred, but their replacement-rate on the balance sheet tapered increasingly every three months".

They forecast U.S. economic growth of 2.2 percent in 2017, an increase from the previous projection in March.

The US Federal Reserve has pressed on with the normalization of interest rate policy, by hiking borrowing costs for the second time this year.

"I still expect this to be the last hike for 2017, given emerging headwinds for the U.S. economy, in particular for consumption, as well as the worryingly weak inflation and wage growth paths", she said.

The Bank also outlined its plan of reducing its balance sheet, which it expanded by buying bonds and other securities in order to tackle the housing crisis leading up to the great USA financial meltdown in 2008.

One FOMC member, Minneapolis Federal Reserve Bank President Neel Kashkari, dissented from the decision, preferring to keep policy on hold for now. The pan-European STOXX 600 index dropped 0.5 percent, led lower by the basic resources and oil and gas sectors, as the stronger dollar weighed on metals prices.

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