Federal Reserve Executes Expected Rate Hike


The United States Federal Reserve executed an expected increase in interest rates on Wednesday. The Reserve also predicts fewer hikes will take place in the foreseeable future. Officials for the Reserve express the tightening cycle that is necessary as a result of stagnant global growth and market volatility may be nearing its end.

A spokesman for the central bank explains the nation’s economy is showing strong growth and is accompanied by a constantly improving job market. The Reserve said that some gradual rate hikes would be necessary for the future which has many optimistic that the Reserve was making plans to cease increases in the cost to borrow money.

A statement released by the Fed following its most recent policy meeting characterized the current state of economic risks to the economy as ‘roughly balanced’ and said it would closely monitor global financial implications to make any needed adjustments.

The present rate hike is the fourth of the year and increases the lending rate from 2.25 percent to 2.50 percent.

Jerome Powell, Federal Reserve chairman, plans to explain the details to the public during a press conference Wednesday afternoon.

Many feel the decision to raise interest rates for the fourth time will annoy U.S. president Donald Trump. President Trump has been vocal in the past regarding his belief that rate hikes are damaging the U.S. economy.

The rate hikes by the Fed is intended to reduce the impact that monetary policies by the Trump administration has on the economy. Economic experts with the central bank feel the growth of the economy is too fast to sustain.

Some analysts worry that the economy might experience tough times next year as the positive effects of Trump spending and tax cuts begin to fade.

The stock market dropped to its low for the day shortly after the announcement by the Fed. The dollar was a little stronger than the day before versus other major currencies following the announced rate hikes.

Economic forecasts were also released Wednesday which showed two rate hikes were expected in 2019 and one in 2020. These forecasts differ from those in September which predicted three rate hikes to occur next year.

The current tax hike and other policy decisions received full support from all members of the Federal Reserve.


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