Fed rate hikes could come faster

Fed rate hikes could come faster”

United States central bankers say they may need to raise interest rates faster than planned due to "considerable uncertainty" linked to Donald Trump's fiscal stimulus plans, which could fan inflation.

Chair Janet Yellen said the United States central bank was "operating under a cloud of uncertainty".

Fed policymaker projections released last month pointed to a labor market heating up to just a little stronger than its longer-run normal level. USA stocks have rallied to record highs since the November 8 election on bets of a Trump reflation era.

With the unemployment rate seen as more likely under Trump to remain low, the FOMC "might need to raise the federal funds rate more quickly than now stem a potential buildup of inflationary pressures", numerous participants said. However, nearly all also indicated that the upside risks to their forecasts for economic growth had increased as a result of prospects for more expansionary fiscal policies in coming years. The Fed's preferred measure of inflation, the core personal consumption expenditure index, is now around 1.7 per cent.

Three interest-rate increases this year is a "reasonable" assessment of what the US central bank should do at a time when unemployment has declined and inflation is slowly moving up, said Federal Reserve Bank of San Francisco President John Williams.

In Europe, consumer price inflation jumped to 1.1 per cent, its highest since September 2013, but still remains low by historical standards.

Rose Valley scam: Tapas Pal's CBI remand extended by three more days
She further claimed that Sudip Bandyopadhyay's arrest had been made under pressure from the PMO. Rose Valley owner Gautam Kundu and several others have been behind bars for over a year now.

The meeting's minutes showed that several Fed policymakers said that "depending on the mix of tax, spending, regulatory and other possible policy changes, economic growth might turn out to be faster or slower than now anticipated".

President-elect Trump campaigned on promises to cut taxes, eliminate regulations and boost spending on defense and infrastructure to stimulate economic growth.

The Fed's initial statement and detailed economic forecasts published on December 14 tipped three interest rate rises in 2017, up from the two previously envisaged.

Yet the committee also noted that there was now "substantial uncertainty" about the size, composition, and timing of prospective fiscal policy changes.

Wall Street share indexes have rallied to record highs and government bond yields have leapt from ultra-low rates on the prospects of faster economic growth, higher inflation and gradually rising interest rates.

The minutes said that the rate hike, "was viewed as appropriate in light of the considerable progress that had been made toward the Committee's objective of maximum employment and, in view of the rise in inflation since earlier in the year, the Committee's confidence that inflation would rise to 2 percent in the medium term".

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