Published: Wed, June 28, 2017
Business | By Max Garcia

US Fed raises key rates for 2nd time this year

US Fed raises key rates for 2nd time this year

Meanwhile, Hong Kong's de facto central bank followed the Fed and boosted interest rates for a third time since December a year ago, elevating the risk of a sell-off in the world's priciest housing market.

The policy makers agreed to increase its benchmark rate by a quarter point to a new range of 1 percent to 1.25 percent. USA employers continue to add jobs at a steady rate.

The market is expecting one more rate hike by the Fed in the current fiscal year. The rest said the Fed would make such a move later by its December 12-13 meeting. That effort resulted in a five-fold increase in its portfolio to $4.5 trillion. The common theme - then, as now - has been a slow growth economy with low inflation, according to Bankrate.

For agency debt (MINT) and mortgage-backed securities (MBB), this cap would be $4 billion per month, rising by $4 billion every quarter until a cap of $20 billion per month is reached.

FOMC expects gradual policy adjustments and expects further strengthening in the labor market. She suggested that balance sheet normalization could be put into effect "relatively soon".

Money market instruments such as Fed fund futures show market players see the likelihood of one more rate hike this year as less than 50 percent.

At Bank for Investment and Development of Việt Nam (BIDV), exchange rates saw no change compared with Wednesday, being listed at VNĐ22,665 for buying rate and VNĐ22,735 for selling rate.

But the Fed's forecasts are only predictions and are frequently revised as its assessments evolve.

The Fed has in recent weeks wrestled with contradictory signals from unemployment and inflation. Some also note that political paralysis in Washington has raised doubts about whether Congress will increase the nation's borrowing limit and pass a new budget. Technology stocks have seen heavy selling since last Friday, in the wake of big gains that have led to worries they've become too pricey.

The committee said it intends to "gradually reduce the Federal Reserve's securities holdings". The unemployment rate is now at 4.3 percent, at - or even below - the level long considered to be full employment.

In their quarterly projections, Fed officials saw the economy growing slightly faster than previously forecast, with GDP up 2.2 per cent this year, a tenth of a percentage point higher than forecast in March. Those forecasts are far below the 3 per cent annual growth the Trump administration has said it can achieve through tax cuts, deregulation and tougher enforcement of trade rules to protect American jobs.

"Moreover, the central bank hasn't acquired a mandate to target asset prices, so they are only likely to affect its policy stance if they alter its view of the risks to the outlook for employment and inflation" he added. Yields rise when bond prices fall. Fixed income traders are clearly unconvinced with the Fed's hawkishness.

Australia reports on the jobs market Thursday.

Yellen would not comment on her future beyond her intention to serve out her term as chairwoman, which ends next February.

Like this: