- Fed Raises Interest Rates Despite Growing Uncertainty
The Federal Reserve raised interest rates on Wednesday despite rising oil prices and global trade tensions.
U.S. policymakers raised overnight lending rate by 25 basis point to 2.25 percent, while predicting another rate hike in December, three more in 2019 and one in 2020. The third of such increase this year.
According to the apex bank, U.S. economy will continue to grow for the next three years, therefore, a gradual rate increase is appropriate. A decision President Trump opposed.
“I am not happy about that,” President Trump said at a press conference in New York. “I’d rather pay down debt or do other things, create more jobs, so I’m worried about the fact that they seem to like raising interest rates. We can do other things with the money. But they raised them.”
The Fed predicts the economy will grow faster than the projected 3.1 percent this year and continue to expand at a moderate pace for at least three more years. This, the central bank attributed to low unemployment rate and stable inflation rate nearing its 2 percent target.
“The labor market has continued to strengthen … economic activity has been rising at a strong rate,” Fed said in a statement.
While rising fuel price may hurt consumer spending and eventually slow down growth if OPEC fails to fill the deficit likely to be created by US-Iran sanctions on November 4th. Fed Chairman Jerome Powell believes the economy is strong enough to withstand such impact.
The US dollar gained against the Euro to 1.1686 on Thursday.