Fed raises interest rate before the inauguration of the Trump – the State of Minas

The Federal Reserve (Fed, Central american Bank) raised interest rates on Wednesday (14), and based on the good economic prospects before the arrival of Donald Trump to the White House.

This is the second high since 2008.

After a two-day meeting, the Monetary Policy Committee of the Fed (FOMC) announced an increase of 0.25 of rate, now between 0,50% and 0,75%, which increases the risk of a high cost of credit in the United States.

it Was the first meeting since the victory of Trump, on November 8.

exactly one year Ago, the Fed made its first increase in almost a decade and put an end to its policy of wikipedia zero applied since 2008 to support the economic recovery after the Great Recession of 2008-09, and to give fluidity to the credit.

Since last December, the entity refused to go up again the rates, citing risks such as the fragile global growth, the potential problems of the break of the british with the EU (Brexit), or the imminence of the american presidential election.

As they waited, the markets, the FOMC seems now safe to rely on the “proofs extras” on the improvement of the economy of the United States – a given that the Fed felt necessary to pass to the action.

Approved by the unanimous vote of the ten members of the FOMC, the decision reflects the “current conditions and future labour market and inflation,” the statement said the committee.

unemployment is still falling and reached 4.6% in October, its lowest rate in nine years, which puts the United States close to full employment – one of the central goals of the Edf.

“The increase in jobs has been strong in recent months,” said the FOMC in its statement.

The annual inflation continued to increase gradually to the 2% target set by the Fed, which expects a rate of 1.9% for the year.

As additional data to that panorama optimistic, the Fed has revised upwards the forecast growth of the largest economy in the world, especially in 2017, when it expects that to grow by 2.1% versus the 2% expected three months ago.

The Fed admits, however, some weaknesses. One is that the investments of the companies to continue being “fragile”, according to the statement. In any case, warned that the consumption, the main engine of american GDP, is at “high”.

political Pressure

After that high interest, you will need to wait the reaction of the markets, but especially the Trump. During the campaign to the White House, the tycoon accused the Fed and in particular its chair, Janet Yellen, to maintain artificially low rates to encourage the government Barack Obama and the candidate the democrat in the race for the White House, Hillary Clinton.

Trump has already promised to lower business taxes and make large expenditures in infrastructure. These measures can be beneficial for the economy, but are a risk to the health of the public finances.