Fed raises rates for first time in 2016

[ckf]

America finally got a rate hike this year.

The Federal Reserve increased its key interest rate by 0.25% on Wednesday. It signified the Fed's confidence in the improving U.S. economy. Rising rates will affect millions of Americans, including home buyers, savers and investors.

Fed officials raised its target for short-term interest rates by 0.25 percentage points to a range of 0.50% and 0.75%.

It was just the second time in a decade that the Fed has raised rates. The first was in December 2015.

"Economic growth has picked up since the middle of the year," said Janet Yellen, the Fed's chair. "We expect the economy will continue to perform well."

The Fed slashed rates to zero in 2008 in the midst of the financial crisis and kept it there during the Great Recession and beyond.

Related: What a Fed rate hike means for you

The rate increase indicate that the U.S. economy no longer needs the Fed's crutches and consumers and businesses can afford to pay more to borrow. America has added jobs for 74 consecutive months and the country's unemployment rate has fallen to 4.6%, its lowest level since 2007. The U.S. economy has expanded for seven years, even though the pace of growth has been slow.

The Fed hinted that it could raise rates at a faster pace next year. Most Fed officials now project three or more rate hikes in 2017. In September, Fed officials predicted they would only raise rates once or twice next year.

The stock market fell after the decision was announced and Yellen's news conference was underway. The Dow fell over 100 points.

Yellen indicated that the Fed's role in the economy is starting to recede and that Congress will start taking over that job of helping stimulate the economy.

Fiscal policy is "not obviously needed to provide stimulus," she said.

Yellen clarified that it didn't mean she was "trying to provide advice to the new administration or Congress," but said that her staff has been in touch with transition team of President-elect Donald Trump.

Wednesday's move could be the first of more. Some economists believe the Fed will need to raise rates more often -- and perhaps at higher levels -- if President-elect Donald Trump spends big on infrastructure.

A big spending plan would spark demand for many goods, which could cause inflation to accelerate from its low levels. The Fed will have to fight inflation by raising rates.

However, nothing is certain with the Fed. That truth bore out this year. Fed leaders originally projected raising rates four times in 2016. But after a slew of setbacks, such as low oil prices earlier in the year, Fed officials only felt comfortable with this one rate hike for the entire year.

The Fed released a new forecast Wednesday and it projects U.S. economic growth this year to be 1.9% and next year to be 2.1%, both slightly better than the Fed's previous projection in September.

http://money.cnn.com/2016/12/14/news/economy/federal-reserve-rate-hike-december/index.html

[T1R9sledder]

It was expected. No more artificially suppressing rates by Fed with QE. After President Trump's policies get going the growth of the economy will be HUGE!!!!!!

[ArcticCrusher]

38 minutes ago, T1R9sledder said:

It was expected. No more artificially suppressing rates by Fed with QE. After President Trump's policies get going the growth of the economy will be HUGE!!!!!!

Yes it was and the CAD dropped 1.1%.

[Cold War]

Lmao . what has changed that couldn't  of raised rates a month ago. Is there anything that isn't political anymore?

[ArcticCrusher]

7 minutes ago, Cold War said:

Lmao . what has changed that couldn't  of raised rates a month ago. Is there anything that isn't political anymore?

They have been delaying it for some time.  Finally pulled the trigger.

[Cold War]

10 minutes ago, ArcticCrusher said:

They have been delaying it for some time.  Finally pulled the trigger.

Right, I believe it was in October they said the awesome Obama economy was too fragile to raise rates.

[racer254]

27 minutes ago, Cold War said:

Lmao . what has changed that couldn't  of raised rates a month ago. Is there anything that isn't political anymore?

My thoughts exactly

[Zambroski]

32 minutes ago, Cold War said:

Lmao . what has changed that couldn't  of raised rates a month ago. Is there anything that isn't political anymore?

Consumer confidence spiked after Trumps election and looks to be sustainable enough to warrant a rate hike.  

 

 

 

[f7ben]

The US economy is a card castle ....built on a table....and that table has 4 legs that are each balanced on a bullet. The FED's gun has been out of bullet for a long time now and that scares the hell out of them. Problem is if they pull the wrong bullet out from under that table at the wrong time its all coming down again.

 

That is the result of building an economy entirely on QE

[DriftBusta]

1 hour ago, T1R9sledder said:

It was expected. No more artificially suppressing rates by Fed with QE. After President Trump's policies get going the growth of the economy will be HUGE!!!!!!

Yep.  

17 minutes ago, Zambroski said:

Consumer confidence spiked after Trumps election and looks to be sustainable enough to warrant a rate hike.  

 

 

 

 I even wore my bright red Trump tie to work today. The dirty not so little secret is that people are confident about the economy for the first time in a while.   

[BOHICA]

We are in for a big fall....  Its building and not sure trump can right the ship...

[Zambroski]

40 minutes ago, BOHICA said:

We are in for a big fall....  Its building and not sure trump can right the ship...

I honestly don't see it.  Although we will have to come to some really unsettling realizations where we are and have been over the last eight.....them move onward and upward.

[xtralettucetomatoe580]

14 minutes ago, Zambroski said:

I honestly don't see it.  Although we will have to come to some really unsettling realizations where we are and have been over the last eight.....them move onward and upward.

Me neither.