Fed Raises Interest Rates, Signalling Confidence in Ecomony

Spot gold was flat at $1,316.44 per ounce at 9.23am. In the previous session it touched $1,307.51 an ounce its lowest since 1 March

Spot gold was flat at $1,316.44 per ounce at 9.23am. In the previous session it touched $1,307.51 an ounce its lowest since 1 March

For the sixth - count 'em, six, 6 - time since the worldwide financial crisis of 2008, the Federal Reserve Bank has raised interests.

At the gathering officials put in place the first interest rate increase of new Chairman Jerome Powell's tenure, lifting their overnight target rate range to 1.50% and 1.75%.

However, he also acknowledged that central bankers now consider the prospects of a global trade war as a "more prominent risk" to the economic outlook.

On Wednesday, the USA central bank again raised its benchmark overnight lending rate by another 25 basis points- the fifth rate hike since it ended its ultra-low interest rate policy in December 2016, and setting current rates to a range of 1.50 percent to 1.75 percent. The vote was unanimous for a quarter-point increase in the federal funds rate. Low-interest rates will help finance the out-of-control federal deficit.

Policymakers were largely split on Wednesday as to whether a total of three or four rate hikes would be needed this year.

Stocks rallied after the announcement.

The latest set of quarterly forecasts forecasts showed that policy makers were divided over the outlook for the benchmark interest rate in 2018. The fed funds rate, for example, topped out at 5.25% at the height of the last economic expansion from 2001 to 2007.

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Some investors had speculated that Powell might move to impose his mark on the central bank by indicating a faster pace of rate hikes for 2018.

Its median projection for GDP rose to 2.7% in 2018 and 2.4% in 2019, up from 2.5% and 2.1%, respectively from the Fed's December projections.

Fed policymakers now project US economic growth of 2.7% in 2018, up from the 2.5% forecast in December, and have also marked up growth for next year.

Earlier this month, Powell told lawmakers the economy was "strong" and tax cuts would add "meaningfully to growth".

The combination of $1.8 trillion in expected fiscal stimulus from the Trump administration and recent hints of price and wage pressures had prompted some Fed officials to speculate more Americans could be drawn into an already tight labor market. The Committee expects that economic conditions will evolve in a manner that will warrant further gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run.

The United States central bank increased lending rates by 25 basis points on Thursday amidst market turmoil all over the world.

Adam Cole, chief currencies strategist at RBC Capital Markets, said a "knee-jerk reaction" to the Fed flagging four hikes this year may see the dollar strengthen against the euro. The magnitude of the impacts on worldwide capital flows, business fixed investment, productivity, exchange rates, and inflation are all very hard to gauge, making the Fed's job very challenging in 2018.

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