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US Fed issues first rate hike for first time in 7 years

by ChemOrbis Editorial Team -
  • 17/12/2015 (09:33)
According to media reports, the US Federal Reserve (Fed) raised its key interest rates by 25 basis points at their meeting on December 16, the first rate hike from the US central bank since December 2008. The Fed’s new target interest rate range stands at 0.25% to 0.50% from the previous zero to 0.25%.

The Fed reported that the US economy has posted modest growth and it is strong enough to withstand higher borrowing rates. The unemployment rate is now at a seven year low of 5%.

The bank implied that it planned to implement a series of gradual rates increases over the next year as the economy gains momentum and the inflation rate rises. The Fed also reported that they may refrain from any further rate increase unless the inflation rate moves up. The inflation rate is now below the bank’s target of 2%.

According to Fed officials, the US economy will grow 2.4% in 2016 and the inflation rate will rise from 0.4% in 2015 to 1.6% in 2016 and to 2% by 2018. The unemployment rate will be stable at 4.7% over the next three years.
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