The U.S. Federal Reserve raised its key interest rate again. The move was expected. It’s the fourth hike this year.
But as CGTN’s Daniel Ryntjes reports, the central bank indicated it would slow the pace of hikes in the new year.
The U.S. Federal Reserve has raised interest rates by a quarter point and projected two further rises next year. The announcement sent already volatile financial indices in the United States plunging once again.
The Federal Funds Rate now stands at a range of between 2.25 and 2.5 percent. But here’s an important thing to remember.
The Federal Reserve is still forecasting a continued strong U.S. growth and a healthy jobs market in 2019, though Chairman Jerome Powell also notes a change in the national mood, through “developments that may signal some softening relative to what we were expecting a few months ago.”
Among those developments are a softening of robust global growth and concerns about the impact of trade tariffs on business confidence. That’s led the Federal Reserve to slightly lower forecasts for growth and inflation, and to predict just two quarter-point rate hikes for next year, where before it had been three or four.
This week, President Trump urged the Fed to ignore financial data and not raise rates any further. In a tweet, he advised the Fed to “Feel the market, don’t just go by meaningless numbers.”
At a news conference, Powell was clear about his determination not to heed Trump’s advice, saying, “Political considerations play no role whatsoever in our discussions or our decisions about monetary policy.”
Powell added, “We think (it’s) essential to be able to do our jobs in a non-political way, and we at the Fed are absolutely committed to that mission, and nothing will deter us from doing what we think is the right thing to do.”
So the mood in the country, which Powell called “angst” may now be a factor in the economy, but he made clear that decisions will still be made on the basis of economic data.
One important number worth crunching is the Core PCE inflation, the Fed’s preferred measure, which has remained notably below the Fed’s two percent target level. So that does provide some leeway for the Fed to maintain low-interest rates overall.
William Cohen explains the reasons behind the latest rate hike and the stock market reaction
CGTN’s Rachelle Akuffo spoke with William Cohan, special correspondent for Vanity Fair and author of “Why Wall Street Matters” about the latest U.S. interest rate hike