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US Federal Reserve raises benchmark rate by a quarter point

Federal Reserve Chairman Jerome Powell explains the Fed's decision to raise interest rates by a quarter point at a news conference following a two-day Federal Open Market Committee meeting in Washington, DC, USA, on Dec. 19, 2018. EPA-EFE/JIM LO SCALZO

Federal Reserve Chairman Jerome Powell explains the Fed’s decision to raise interest rates by a quarter point at a news conference following a two-day Federal Open Market Committee meeting in Washington, DC, USA, on Dec. 19, 2018. EPA-EFE/JIM LO SCALZO

EFE

The US Federal Reserve on Wednesday raised its benchmark interest rate by a quarter of a percentage point, going through with the widely expected rate hike despite strong opposition from President Donald Trump .

The increase in the federal-funds rate to a target range of between 2.25 percent and 2.5 percent, approved unanimously at the end of a two-day meeting of the central bank’s policy-making body, was the fourth hike of 2018.

“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 rising at a strong rate,” the FOMC’s statement for December read.

On Tuesday, Trump warned that a further tightening of monetary policy would be a bad move.

“I hope the people over at the Fed will read today’s Wall Street Journal Editorial before they make yet another mistake. Also, don’t let the market become any more illiquid than it already is,” the president wrote Tuesday on Twitter.

In its statement, the FOMC said that the “risks to the economic outlook are roughly balanced” but that it will “continue to monitor global economic and financial developments and assess their implications for the economic outlook.”

In a press conference after the FOMC’s decision, Federal Reserve Chairman Jerome Powell said there is a “fairly high degree of uncertainty about both the path and the destination of any further increases.”

He added, however, that Federal Reserve officials “now think it is more likely the economy will grow in a way that calls for two rate increases next year,” down from a forecast of three increases at the FOMC’s September meeting.

US stocks fell on Wednesday after the latest rate hike, with the Dow Jones Industrial Average closing down 1.48 percent.


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