The Fed raises rates, not happened since 2006. Stop the era of zero-cost money – The Republic

Milan – The Federal Reserve raised interest rates the Fed Funds 0.25%, thus bringing in a band between 0.25 % and 0.50% from the previous range between zero and 0.25%. It was nine years that the cost of money in the US was not increased since 2008 and rates were in the range minimum. The same Fed President Janet Yellen, said that with today’s move “puts an end to an exceptional period,” characterized by the financial crisis and the wider recession in history. But now the Fed “recognizes the considerable progress of the economy,” which will grow just over 2% at year end, and therefore the rise “is appropriate.”

In the statement announcing the decision, the Central Bank wrote that “The Committee believes that there are significant improvements in the conditions of the labor market, this year, and is confident that inflation will rise in the medium term to its target of 2%.” Of course, risks remain that depend Yellen “developments abroad”, primarily by the slowdown in emerging markets. But the sense is that the US is strong enough. Observers and financial markets has long bet on raising interest rates by the Fed, to break the downward path that led Ben Bernanke – exactly December 16 seven years ago – to reduce rates in the range of 0-0 minimum , 25%, from which no one was ever moved. Even today the trading day revolved around waiting for the choices of Washington, despite the drop in oil prices remains a concern for investors. The publication of the decision of the Fed, Wall Street has soared with the Dow Jones + 1.15% and the Nasdaq to +1.33. The dollar stabilized just below 1.1.

In a move expected by 2006. What will change for the dollar, and emerging markets

The meeting of the US central bank He has also led to outline a path of raising rates “gradually” in the course of 2016, reassuring the markets and using that word twice. After today’s, on balance, they could get four more hikes rates by a quarter point in the next year. Some indication comes in fact from the survey of board members of the Fed’s interest rate deemed “appropriate” in the coming years, equal to 1.375% at the end of 2016, to 2.375% at the end of 2017 and 3.25% at the end of 2018, with a medium-term target of 3.5%. The Fed said it expected that “with gradual adjustment of monetary policy, economic activity will continue to expand at a moderate pace and the indicators of the labor market will continue to grow stronger.” The Committee also “expects that economic conditions evolvernno in order to justify only gradual increases in rates,” rates that “probably will remain, for a time, below levels that are expected to prevail in the long term. However, the actual pitch rates depend from the Outlook statement, as reflected by the incoming data. “

The Economist:” Move right “

As for the health of the US economy, they are unchanged growth estimates for the current year, as well as those on employment. For 2015, it expects growth of gross domestic product to 2.1%, in line with the figure for September. This year, the unemployment rate should be around 5%, as expected in September. Instead slightly raised its growth forecast to 2016, which now go to 2.4% from 2.3%. Revised downwards instead estimates inflation ‘core’, that is calculated net of special factors such as energy is expected at 1.3% in 2015 (1.4% according to the previous forecast), 1, 6% in 2016 (1.7% previously), to 1.9% in 2017 and 2% in 2018.

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