Daily Management Review

A Gradual Hike Ion Rates Anticipated To Be Continued By U.S. Fed In 2018


02/26/2018




A Gradual Hike Ion Rates Anticipated To Be Continued By U.S. Fed In 2018
The U.S. is expecting a stronger economic outlook and this has prompted experts to predict that the U.S. Federal Reserve would continue its strategy of a gradual hike in interest rate through this year.
 
"The (Federal Open Market) Committee expects that the ongoing strength in the economy will warrant further gradual increases in the federal funds rate," said the semiannual Monetary Policy Report to the Congress that was released by the Fed at the end of last week.
 
"The economic expansion continues to be supported by steady job gains, rising household wealth, favorable consumer sentiment, strong economic growth abroad, and accommodative financial conditions," said the report.
 
For the fiscal year of 2018, the report noted that there is likelihood of a moderate increase in the economic growth primarily driven by some of the federal fiscal policies such as the 1.5-trillion-U.S. dollar tax cuts and the enhanced budgeted spending by the government for the fiscal 2018 and 2019.
 
The report further states that it expects that the Fed would also increase rates of interest in the country by on at least three occasions this year, and this anticipation was based on the same forecasts made by the Fed in December in this regard.
 
According to the Fed, the U.S. economy and the financial system is only exposed to moderate on balance risk as far as the overall vulnerabilities are concerned despite the sharp fall in the U.S. and the global market in recent weeks.
 
However, for a range of assets that incudes equities and real estate, there would be elevated pressures which are expected to continue, it warned. 
 
The recent market turbulence and volatility and its impact on the U.S. economy has been downplayed by the U.S. Fed officials especially in their public remarks and comments. The Fed has said that it would persist with their forecast for a stronger growth outlook accompanied by a gradual hike in rate of interest.
 
The Fed feels that the future path for a series of gradual but steady hike in rates has bene cleared as it is more confident about the economic growth and the forecasted rates of inflation and this has been reflected in the minutes of the Fed's policy meeting which were held on Jan. 30 and 31 last year.
 
Strong overseas economic figures as well as strong domestic data, big tax cuts by the government and the overall accommodative financial conditions prevailing in the U.S. has propped up a number of officials to give an uptick to their future estimation of the economic growth in the country in the near term.
 
(Source:xinhaunet.com) 






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