The Fed raised the interest rate a quarter-point increase in the discount, or primary credit, rate, from 1 percent to 1.25 percent, and moved its target range from a range of 0.25 percent to 0.5 percent to 0.5 percent to 0.75 percent. The overnight funds rate currently sits at 0.41 percent.
The Fed was citing the steady growth of the American economy. The Fed did not give any indication that the election of Donald J. Trump has altered its economic outlook saying it still expected a slow economic expansion. The Fed also implied that it would continue a gradual advance toward higher rates and that they expected to raise rates three times in 2017. Of course, they said that for 2016 as well.
The decision was taken by a unanimous vote of the 10 members of the Federal Open Market Committee. This was actually the first time in recent months the Fed has acted by consensus. The Fed also said it expected that the economy still needed help. Its economic outlook remained unchanged from September. Fed officials continued to predict the economy would expand at an annual rate of about 2 percent for the next few years.
However, we see asset inflation from capital inflows. This will support the dollar and the US share market. The Dow has penetrated yesterday’s low and a close below that should give a pull-back. Gold fell to new lows trading at 1149 and Crude oil dropped from $54 to $50. The euro is also poised to break to new recent lows.
