Fed lifts interest rate
The US Federal Reserve has moved to increase its rate by a quarter of a percentage point – a decision that came earlier than some market commentators had predicted.
Thursday, March 16th 2017, 10:00AM
It is sticking with its plan to increase the rate a total of three times this year.
Chair Janet Yellen said there was a more optimistic frame of mind among businesses but they were not rushing out to invest yet.
“If we were to see a major shift in spending reflecting those expectations, that could very well affect the outlook. I’m not seeing it at the moment but the shift in outlook is obvious and notable.”
She said the market might be out of synch with the Fed because it had become used to the idea that it would only move once a year.
The direction of US rates plays a part in setting New Zealand’s long-term interest rates, which have moved up significantly over recent months.
Yellen said it was too soon to say what Donald Trump’s plans to cut taxes and increase spending could do to interest rates because the plans were still too unclear.
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