US Federal Reserve Fed members have decided to raise the policy rate despite President Donald Trump's warning "Do not raise interest". With the Fed's decision to be announced as the fourth rate increase this year, the bank's policy rate rose from 2-2.25 percent to 2.25-2.50 percent.
Following the final meeting of the Federal Open Market Committee (FOMC), which set the Fed's monetary policy, the committee adopted a unanimous decision to increase the policy rate by 25 basis points, according to the decision published by the committee. The decision also emphasized that Fed closely followed global economic developments.
Commenting on the Fed's decision, the cost of borrowing will increase, President Trump's reaction will be noted. Trump criticizes the Fed's rate hike decisions on the grounds of damaging the country's economy.
Trump warns central bank not to raise interest
The Fed has been raising interest rates for a while, suggesting that the revival of monetary policy to the economy has been unsustainable. However, the Trump administration has raised concerns over the weakening of the impact of the financial revival that the government has made with the $ 15 billion tax cut decisions, as well as concerns over the slowdown in the global economy that the US economy could be dragged into flooded waters.
Growth in the American economy is strong, employment is positive
The FOMC decided to increase the federal funding rate to 2.25-2.50 percent in the light of developments and expectations in terms of labor market conditions and inflation. expression was used.
In the meantime, the resolution reads, "The Committee considers that some additional gradual increases in policy interest are in line with the sustainable growth in the economy, strong labor market conditions and a 2 percent symmetric inflation target." It was noticed that the evaluation was included. This sentence was used without the phrase ”a quantity yer in the previous decision texts.
Interest expectation for 2019 has been increased from three to two
In addition to the interest rate decision, the Fed also updated its quarterly economic projections.
According to the new projections, the median interest rate estimate of the Fed members for the end of 2019 decreased from 3.1 percent to 2.9 percent. This rate, the bank officials, next year, instead of three twice to plan to increase interest rates.
The median interest projections of FOMC for 2020 and 2021 were retreated from 3.4 percent to 3.1 percent. These rates indicated that the bank officials expect to maintain the upper interest rate limit at 20.4 percent in 2020, and then they expect to keep them at 3.25 percent.
On the other hand, the Fed's growth expectations for this year were revised downwards. Accordingly, bank officials are expecting the US economy to grow by 3.0 percent instead of 3.1 percent in 2018.
In addition, 2019 growth expectation, which was announced as 2.5 percent in September, was reduced to 2.3 percent, while the 2020 forecast was fixed at 2 percent. Bank officials continued to predict the growth of the national economy by 20% in 2021.
FOMC's unemployment rate projections remained stable at 3.7 percent for the end of this year and 3.5 percent at the end of the year, while the 2020 expectation was 3.5 percent to 3.6 percent and 2021 estimated 3.7 percent. to 3.8 percent.
Median estimates for the core Personal Consumption Expenditures (PCE) price index, the Fed's preferred inflation indicator, were 1.9 percent for this year and 2 percent for the years 2019-2020-2021. The projections released in September predicted that the core PCE would be 2 percent this year and 2.1 percent in the next three years.
The markets focused on a press conference organized by Fed President Jerome Powell after the interest decision and economic projections.
Investell will discuss the decision to raise interest rates and economic projections.