The Fed raises interest rates and see faster pace of high in 2017 – R7

WASHINGTON (Reuters) – The Federal Reserve, the central bank of the United States, raised the interest rate by 0.25 percentage point on Wednesday and signalled the fastest rate of high in 2017, in the midst of the promises of the president-elect Donald Trump to boost growth through tax cuts, increased spending, and deregulation.

The high basic interest rate for the range between 0.50 and 0.75 per cent was widely expected. But the prospect of a monetary tightening is more pronounced contributed to a movement for the sale of short-term securities of the U.S. Treasury, and shares of stock.

At a news conference after the unanimous decision on the interest rate, the chair of the Fed, Janet Yellen, said the election of Donald Trump has put the central bank under a “cloud of uncertainty” and led some authorities to change their vision about what is to come.

“All the participants of the Federal Open Market Committee (Fomc) recognize that there is considerable uncertainty about how economic policy can change and the effect it can have on the economy”.

In part as a result of the changes envisaged, the Fed now sees three increases in interest rates in 2017 instead of two as planned in September.

Yellen has classified this change as “an adjustment is very modest”, driven by strong employment gains and evidence of inflation accelerated.

She also said that the increase in the interest rate on this Wednesday should be “understood as a reflection of the confidence that we have in progress that the economy has done.”

With the president-elect of the United States, Donald Trump, planning a round simultaneous tax cuts and increased infrastructure spending, the members of the central bank, the north-american have changed their prospects for a growth slightly faster, lower unemployment and inflation slightly below the target of 2 per cent of the Edf.

The Fed projected that the three increases in interest rate next year should be followed by the three other high in 2018 and in 2019, before the rate reaches a “normal” 3.0 percent in the long term. The forecast is a little higher than three months ago and it is a sign that the Fed feels that the economy is still gaining strength.

(By Howard Schneider and Lindsay Dunsmuir)