US Federal Reserve raises key interest rate
THE US Federal Reserve has raised the benchmark lending rate for the second time this year, and signaled it will be more aggressive about rate increases in 2018 and 2019 amid “strong” economic growth.
And although he acknowledged concern among businesses nationwide about the uncertainty created by US President Donald Trump’s abrasive trade policies, Fed Chairman Jerome Powell stressed “the US economy is in great shape”.
The unanimous vote the Fed’s rate-setting Federal Open Market Committee brings the federal funds rate to a range of 1.75-2.0 per cent, and indicated there would be two more rate increases this year and four next, one more than previously expected.
Wall Street was not happy with the aggressive stance, worried that it signaled rising prices. All three major indexes turned negative right after the announcement and closed even lower.
The Dow Jones Industrial Average dropped 0.5 per cent and the broad-based S&P 500 shed 0.4 per cent.
Powell downplayed concerns about accelerating inflation, saying the central bank would not overreact to an expected uptick driven by the recent increase in oil prices.