Wednesday, 16 December 2015

Federal Reserve Announces First Rise in US Interest Rates Since 2006

Fed chair Janet Yellen signalled to Congress earlier this month
that the US economy was strong enough for the Fed to raise rates.
THE GUARDIAN: US central bank signals end to seven years of a monetary policy that began amid the worst financial crisis since the Great Depression

The Federal Reserve raised interest rates on Wednesday, ending an extraordinary period of government intervention in the financial markets that started at the height of the recession.

After holding its benchmark federal-funds rate near zero for seven years, the Fed increased rates a quarter-percentage point. The move signals the end of a monetary policy that began amid the worst financial crisis since the Great Depression.

In a statement the Fed said economic activity had been “expanding at a moderate pace. Household spending and business fixed investment have been increasing at solid rates in recent months, and the housing sector has improved further.”

Given the economic outlook, and “recognizing the time it takes for policy actions to affect future economic outcomes,” the Fed decided to raise the target range for the federal funds rate a quarter point, the first such rise in close to a decade.

The central bank signalled more increases to come “with gradual adjustments in the stance of monetary policy” and argued that “economic activity will continue to expand at a moderate pace and labor market indicators will continue to strengthen.” » | Dominic Rushe in New York and Jana Kasperkevic in Washington | Wednesday, December 16, 2015