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Great news: Largest economy adjusted interest rates upwards

Yes, the good news is finally here. The Federal Reserve has finally decided that the US economy has recovered from the 2007 – 2009 financial crisis. It raised the benchmark interest rate by a quarter of a percentage point to between 0.25 percent and 0.50 percent.Fed ChairJanet Yellen said, “With the economy performing well and expected to continue to do so, the committee judges that a modest increase in the federal funds rate is appropriate.” Yes, even a nobody like me wanted Federal Reserve to show that the US economy is doing well. My earlier article: I hate it when US economy has bad news
The US labor market has improved with unemployement rate falling to 5 percent and the Federal Reserve expects the inflation to rise to 2 percent. This adjustment is a gradual process but is aimed at keeping the Federal Reserve ahead of the curve as the economy recovery is continuing. It would not want to wait for the growth to accelerate before it suddenly increased the rates abruptly. Labour market is expected to fall further to just 4.7 percent next year with economic growth hitting 2.4 percent. This is considered a good growth number for the largest economy in the world. Fed officials also said that this policy would not cause much disruptions to the financial market.
Anyway, at the current rate, it remains accommodative and this should not be stopping businesses from investing or consumers from spending. This rate tightening would continue and from a Dec.9 Reuters poll is expected to be 1.0 percent to 1.25 percent by end of 2016. As at today, nothing bad has happened and  the financial markets around the world seemed to have anticipated this hike. Ringgit opened higher versus US dollar and closed higher today (17 Dec). Anyway, the expectations is that with US dollar expected to strengthen thus Ringgit’s movement is likely to be volatile with a downward bias. Just google for news about Ringgit yeah. Thank you Fed. You have removed an uncertainty. Now, let’s start looking at fundamental instead yeah.
written on 17 Dec 2015
Next suggested article: Zeti: GDP up 4.7% for Q3, ringgit significantly undervalued

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Charles Tan The Founder The Writer Kopiandproperty
Charles Tan

Charles is Founder of kopiandproperty.com He writes from his investment experience for the the past 20 years in investments including property, stock, unit trust and more as well as readings and conversations with many property gurus in the industry. kopiandproperty.com is an independent property blog which is not affiliated to any media company, property developer or even real estate agencies.

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