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US Fed raises benchmark interest rate by 25 bps after one-year pause

www.cnstock.com
2016-12-15 11:54

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Xinhua News Agency reported on Dec. 15 that the US Federal Reserve (Fed) announced interest rate hike on Dec. 14 (3:00 am, Dec. 15, Beijing time) after one-year pause.
 
It is also reported on finance.sina.com that the US Fed raised the benchmark interest rate by 25 basis points from 0.25-0.5 percent to 0.5-0.75 percent. Fed’s latest expectation on economy and interest rate shows that 3 interest rate hikes are expected in 2017, one more hike than originally expected.
 
Latest price of the Fed fund futures shows that the first interest rate hike in 2017 might be announced in June or July. Affected by the news, the US dollar index rose, while US stocks, gold and crude oil weakened. As of press time, the US dollar rose over 1 percent against Japanese Yen; gold price dropped 0.53 percent to below 1,150 US dollars per ounce; WTI crude futures dived over 3 percent; the Dow Jones industrial average index turned rise into drop and declined slightly by 0.04 percent.
 
Almost all market analysts expected earlier that the Fed will raise the benchmark interest rate by 25 basis points this time. The Fed’s final decision is in line with market expectation again.
 
Fed’s latest economic evaluation is as follows. Information received since the Federal Open Market Committee met in November indicates that the labor market has continued to strengthen and that economic activity has been expanding at a moderate pace since mid-year. Job gains have been solid in recent months and the unemployment rate has declined. Household spending has been rising moderately but business fixed investment has remained soft. Inflation has increased since earlier this year but is still below the Committee's 2 percent longer-run objective, partly reflecting earlier declines in energy prices and in prices of non-energy imports. Market-based measures of inflation compensation have moved up considerably but still are low; most survey-based measures of longer-term inflation expectations are little changed, on balance, in recent months.

Translated by Jennifer
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