The Fed stays the course under its new leader

New Fed Chair Jerome Powell indicates little concern about inflation

James OngTime to read: 2 minutes.

The Federal Reserve (Fed) raised interest rates by a quarter of a percentage point as expected on Wednesday and signaled two more rate hikes for 2018. It also released its Summary of Economic Projections (SEP) for the next few years, which suggests that the Fed is optimistic regarding the future performance of the US economy.

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Fed hikes interest rates despite soft inflation

The central bank also surprises markets with a plan for balance sheet unwinding

CorumJames Ong

As was widely expected, the Federal Reserve (Fed) hiked its benchmark interest rate by 25 basis points today to a range of 1% to 1.25%. While the rate rise was almost 100% priced into the bond market, the Fed’s formal statement leaned hawkish with the unexpected announcement of a plan to scale back its asset reinvestment program by not replacing assets as they mature. The market had not been expecting an announcement on the Fed’s “balance sheet unwinding” plan for another several months.

Ahead of this surprise,

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