Magazine article Global Finance

Markets Cheer Fed Rate Liftoff

Magazine article Global Finance

Markets Cheer Fed Rate Liftoff

Article excerpt

Casting aside concerns about the strong dollar and weakness in economies abroad, the Federal Reserve achieved an historic interest rate liftoff in mid-December. Like a crowd watching a space launch, equity markets cheered the first rate rise in almost a decade, even though it was one of the most widely forecast events in Fed history.

Fed chair Janet Yellen rallied the unanimous support of the Federal Open Market Committee (FOMC), which determines monetary policy, for the increase in the target for the federal funds rate from near zero to a range of 25 to 50 basis points. "I feel comfortable about the fundamentals driving the US economy, the health of US households and domestic spending," Yellen stated during a press conference.

The rate rise suggests the beginning of a normalization cycle that could see a quarter-point increase every quarter In 2016, according to the Fed's expectations, or 'dot plot,' for interest rates. …

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