Fed Raises Key Interest Rate For The Fourth Time Since 2015

Marco Green
June 24, 2017

The amount of securities the Fed held on its balance sheet ballooned from less than a trillion dollars before the crisis to roughly $4-and-a-half trillion.

As for the timing of implementing the plan, Yellen said that if the economy evolves in line with Fed officials' expectations, the central bank could put it into effect "relatively soon".

"Inflation on a 12-month basis is expected to remain somewhat below 2 percent in the near term but to stabilize around the committee's 2 percent objective over the medium term", the statement said.

"The Fed's approach to balance sheet normalisation sees reinvestment only to the extent that maturities exceed pre-set caps".

Mortgage rates did not move much this past week, as the benchmark 30-year fixed inched lower and remains at the lowest level in seven months, according to Bankrate.com's weekly national survey.

"The combination of rising debt burdens and rising interest rates is starting to strain some households, and we're seeing delinquencies pick up from recent lows", McBride says.

The US dollar index, which tracks the US currency against a basket of six rivals, was flat on the day at 96.932 but above its overnight low of 96.323 plumbed after downbeat economic figures.

"Asset sales would be deferred, but their replacement-rate on the balance sheet tapered increasingly every three months". The central bank had pushed rates to near zero in response to the financial crisis.

The Fed has in recent weeks wrestled with contradictory signals from unemployment and inflation. USA 30-year yields were last at 2.769 percent after touching their lowest since November 9 of 2.765 percent earlier.

"There is maybe one more rate hike left, and then they are going to pivot to the balance sheet", he said.

The Fed kept to earlier predictions it might raise its target rate once more this year.

This is the second interest rate rise in three months, and most analysts expect that the Fed will increase rates once more this year.

The administration's budget does expect the federal government's interest rate costs to rise, but that is due to the faster economic growth the program is expected to foster, Mulvaney said. Only Neel Kashkari, president of the Minneapolis Fed bank, opposed the increase.

Experts said that the State Bank of Việt Nam's policies on exchange rates helped the market avoid external shocks, adding that the Fed rate hikes would not have significant impacts on VNĐ/USD exchange rates.

Other reports by Click Lancashire

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