Federal Reserve Raises Interest Rates Despite More Hawkish Outlook

The second rate rise this year was widely expected – but many now expect rates to be kept on hold, on the back of weaker growth figures

Emma Simon 15 June, 2017 | 2:29PM

The Federal Reserve raised interest rates in the US by 25 basis points on Wednesday, to 1.25%. This second rate rise this year – and the fourth in this economic cycle – was widely anticipated, and had been already priced into markets, according to most commentators.

But some were caught off-guard by the more hawkish tone adopted by Janet Yellen, chairman of the Federal Reserve.

While stating that the prospect for the world’s largest economy remained bright, she noted that inflation was running below target.  The US main inflation rate slowed to 1.9% in May, compared to 2.2% in April. It is targeted to run at 2%.

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About Author

Emma Simon

Emma Simon  is a financial journalist, specialising in investment and consumer issues, writing for Morningstar.co.uk

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