Homepage / Currency / Fed raises rates a quarter point, hikes growth outlook for economy
Google and Facebook are watching our every move online. It's time to make them stop Daymond John tells shy airline passenger: You should have talked to me on the plane South Korea says it has no plans to shut down cryptocurrency trading AMD shares surge as Wall Street analysts say the chipmaker is ‘executing on all fronts’ James Altucher, the face of bitcoin, says he’s happy about Facebook’s cryptocurrency ad ban Pending home sales eke out 0.5 percent gain in December as supply shrinks to record low Uber is testing bike sharing in San Francisco The real source of the internet's problems might be the advertising business Game publisher EA's sales forecast tops estimates, sending shares higher GE will likely be dropped from the Dow, Deutsche Bank predicts Samsung surpasses Intel as world's biggest chipmaker for the first time Apple could be the best of the bunch in this tech earnings avalanche The 9-year stock rally still has 'years left,' says one of Wall Street's most bullish strategists Apple: We would never degrade the iPhone experience to get users to buy new phones Bitcoin headed for biggest monthly drop since January 2015 with nearly $60 billion of value wiped off ADP boosts forecast as new tax law spurs demand China 'will open even wider to the UK,' says Prime Minister Li Keqiang Big market swings are something you’re going to have to get used to, says Wells Fargo The dollar keeps weakening. Is that good news for the world? Apple downgraded by BMO, expects iPhone maker to slash revenue forecast this week SoftBank buys majority stake in Japanese messaging giant Line’s mobile division Rising interest rates cause a 2.6% pullback in weekly mortgage applications Trump's State of the Union address 'less hard' than first feared in Asia Trump vows to protect US intellectual property, without naming China Blockchain technology to boost Microsoft earnings, trader says Fujifilm to take over Xerox and combine it into the joint venture Fuji Xerox Samsung is making chips designed to mine cryptocurrencies like bitcoin There’s a risk of market turbulence, but it’s unlikely to hit until 2019, says Santander chairman We'll see up to a 15 percent correction in 2018, Swiss bank CEO says Japan's biggest messaging app Line is planning to launch a cryptocurrency exchange Quicksilver surfwear CEO missing at sea off the coast of France Venezuela says will pre-sell 'petro' cryptocurrency on Feb. 20 Nintendo ups its Switch sales expectations to 15 million units after profits rise 261% European markets seen mixed amid earnings and economic data The UK wants free trade with China. Beijing has its own goals Santander fourth-quarter net profit down 4 percent on US impairments The man who almost became ambassador to South Korea just warned about US plans for North Korea China's Leshi Internet flags $1.8 billion loss for 2017, citing conglomerate cash crunch South Korea says it uncovered about $600 million in cryptocurrency crimes Asia became less democratic in 2017 Al Gore's investment firm backs start-up created by Facebook co-founder Theresa May says she wants a free trade deal with China Chinese manufacturing weaker than expected in January Webpass is leaving Boston in latest sign of Google Fiber’s shrinking ambitions Samsung posts record fourth-quarter profit Asian shares look set for more declines as Wall Street sells off for a second day Don't count insurers out yet after Amazon-Berkshire-JP Morgan move Amazon's health care move could be a big win for consumer health start-ups Red Hat buys CoreOS, a start-up that sold tech developed by Google Here’s what Amazon told employees today about its landmark deal to deliver better health care Top official resigns after false missile alert in Hawaii Crazy odds: These online traders bet on the chaos of Washington and the Trump administration AMD falls despite beating Q4 estimates Facebook ban on bitcoin ads latest in very bad day for cryptocurrencies Indian man dies after being sucked into an MRI machine while carrying an oxygen cylinder Advice for Jeff Bezos, Warren Buffett and Jamie Dimon from a failed effort to control health costs Toys R Us poor holiday sales cast doubts on its future and could force renegotiation of loan terms The Apple sell-off is a buying opportunity into earnings, says trader Google partnership on mobile cloud services drives up MobileIron shares Facebook is banning all ads promoting cryptocurrencies — including bitcoin and ICOs Amazon's moves in health care over the last year are finally starting to make sense Buffett is getting a second chance to partner with Bezos after missing on Amazon as an investment How Pencils of Promise got a $1 million donation from an anonymous bitcoin multi-millionaire Amazon's home devices could be a key to cheaper health care, tech investor Roger McNamee says Two ex-Google engineers built an entirely different kind of self-driving car Cryptocurrencies join the global financial market sell-off as bitcoin drops 7% A travel agent is trying to charge fees for sunbeds Most of the tax cut windfall will boost buybacks and dividends, not workers' pockets, survey predicts The professor who wrote the book on making addictive technology is having second thoughts Trump's immigration policies are 'economic poison' that will cost taxpayers billions Airbnb trolls President Trump ahead of the State of the Union The iPhone X's $1,000 price tag scared everyone away Drop, a rewards app start-up, snags Airbnb's former head of engineering SEC halts one of the largest 'ICOs' ever as it wades deeper into the murky world of cryptocurrency offerings Passing on sanctions, Trump goes even softer on Russia than expected Buy insurers on dip as new initiative from Amazon, Berkshire and JP Morgan is ‘more bark than bite’: Analyst High schools stock up on Narcan to combat teen opioid crisis in US Apple will finally replace the fax machine in health care Apple is reportedly delaying new iOS features until next year because of quality problems Bond expert predicts a ‘wall of buying’ in Treasurys will protect the stock market Home prices surge to new high, up 6.2% in November Noted tech investor says the sector is not the best place to invest right now Sterling predicted to hit pre-Brexit vote level before the end of 2018 Stocks making the biggest moves premarket: AMZN, BRKB, JPM, AAPL, BX, TSLA & more Bitcoin boom to give AMD earnings a boost, says MKM Partners Apple shares fall again on another report of fading iPhone X demand Trump advisor Cohn: President to focus on $1.5 trillion infrastructure plan in State of the Union Why don't foreign investors take fright more often? The dollar is doing something it hasn’t done since 1987 UnitedHealth, CVS plunge on Bezos, Buffett and Dimon plan to improve U.S. health care Amazon, Berkshire and JPMorgan Chase to team in landmark new health care company Can earnings afford to slow down? 'Enemies of the USA': Russia slams America's list of oligarchs with ties to Putin The app that exposed the location of military bases with a heat map is reviewing its features For his next act, former Amex CEO Ken Chenault turns his focus on Silicon Valley Child experts: Just say ‘no’ to Facebook’s kids app Ryanair agrees to recognize British pilots union for first time Arab states are 'determined' to stick with reforms despite deepening 'frustration', IMF says The US 'oligarch list' is strikingly similar to Forbes’ richest Russians ranking Indian ride-hailing firm Ola expands to Australia to take on Uber


Fed raises rates a quarter point, hikes growth outlook for economy

The Federal Reserve came through on a widely expected interest rate hike Wednesday following its two-day policy meeting and sharply raised its economic growth forecast for 2018.

In their decision, the central bank policymakers mostly followed the script, though they did indicate that one less hike is on the way for 2019. Two Fed presidents voted against the increase — Charles Evans of Chicago and Neel Kashkari of Minneapolis.

The move will push the target range to 1.25 percent to 1.5 percent. The rate is pegged to a wide variety of debt instruments, such as credit cards and adjustable-rate mortgages.

One of the more notable developments came from the expectations Federal Open Market Committee members set for gross domestic product next year. The committee collectively raised its GDP estimate from 2.1 percent in September to 2.5 percent.

That comes following two consecutive quarters of 3 percent growth or higher and estimates that the fourth quarter could hit that level as well.

However, the burst may be short-lived. Growth is projected to come back down to 2.1 percent in 2019 and 2 percent in 2020, though both are above the respective 2 percent and 1.8 percent forecasts three months ago.

The committee made no mention of why it expected growth to accelerate, though Chair Janet Yellen and others in past speeches have expressed some optimism that more aggressive fiscal policy could be a help. Congressional lawmakers are set to approve a tax reform package aimed at slashing the corporate tax rate and lowering the level paid by many Americans.

“Once tax cuts kick in, we should see GDP growth north of 3 percent easily,” said Massud Ghaussy, senior director of advisory services at Nasdaq Advisory Solutions. “One one hand we hear all this chatter that inflation is low and is not picking up. On the other hand, when we look at real assets and financial assets, they’re going through the roof.”

On top of the more buoyant outlook for overall growth, Fed officials cut their estimates for the unemployment rate, to 3.9 percent in 2018 and 2019, two-tenths below the previous numbers. The 2020 rate is expected to be 4 percent, down from 4.2 percent, while the longer-run outlook remained at 4.6 percent. The current unemployment rate is 4.1 percent.

The inflation forecast for 2018 also got a modest boost, from 1.6 percent to 1.7 percent.

Reaching its 2 percent inflation goal, however, has remained elusive for the Fed, and that rate is not expected to be hit until 2019. The Fed’s preferred gauge showed just 1.6 percent annualized growth in the latest reading.

Still, the Fed has persevered in hiking rates gradually, with this week’s raise being the third quarter-point move in 2017. Projections for 2018 remained unchanged at three more increases.

“The fact that they stuck with the three rate-hike forecast sends a signal that at this point they’re not ready to adopt a potentially more aggressive stance that a number of people have been talking about for next year,” said Craig Bishop, lead strategist for U.S. fixed income at RBC Capital Markets. “The Fed could very well be two (rate hikes) vs. three going into next year.”

There was some shifting in the FOMC’s closely watched “dot plot” — a chart that depicts where each member expects the federal funds rate to be in the years ahead. There was a mildly dovish tilt to 2019, with one fewer member expecting a third hike in 2019. This was the first meeting for newly confirmed Governor Randal Quarles and was held without Stanley Fischer, who resigned as vice chairman in October for personal reasons.

In approving the hike, the committee strengthened some of the wording regarding the economy in its postmeeting statement.

The statement noted that the jobs market “will remain strong,” an upgrade from the assessment at the Oct. 31-Nov. 1 meeting that conditions “will strengthen somewhat further.” Later, the committee said the current stance of monetary policy is “supporting strong labor market conditions,” a contrast to the language from the previous meeting that indicated “some further strengthening.”

Still, the committee’s indication that three hikes are on the way in 2018 is at odds with market expectations.

While this week’s move was almost fully priced in, traders in the federal funds futures market indicate only two hikes next year, in March and September, according to the CME FedWatch Tool. The market is implying a funds rate of 1.83 percent at year’s end, compared with 1.15 percent currently, a level that will be affected by this week’s decision.

Fed officials have been stumped by the trend in financial conditions, which actually have loosened during the five rate increases the committee has approved since December 2015.

The Chicago Fed’s financial conditions index hasn’t been this low since 1994, and the government’s benchmark 10-year yield actually has edged lower this year despite the Fed’s tightening. At the same time, the stock market has roared higher, with the S&P 500 gaining more than 19 percent year to date.

Correction: An earlier version misstated Charles Evans’ branch. It’s Chicago.

Source: cnbc economy
Fed raises rates a quarter point, hikes growth outlook for economy

Comments are closed.