US interest rates raised

The Federal Reserve has raised US interest rates for a fourth time this year by a quarter percentage point.

Alan Greenspan heads the US's central bank
Alan Greenspan heads the US's central bank

Citing brightening job market, officials at the Federal Reserve said on Wednesday that more increases lie ahead.

The unanimous decision by the US central bank’s policy-setting Federal Open Market Committee moves the benchmark federal funds rate – which affects credit costs throughout the economy – to 2% from 1.75%.

The Fed began to lift rates in June from a rock-bottom 1% and looks likely to keep on with a campaign of “measured” increases to remove stimulus as the economy shows signs of resuming a healthy pace of growth.

The latest increase follows Friday’s Labour Department report that showed the creation of a surprisingly large 337,000 jobs last month.

A further sign of labour market strength came on Wednesday in the form of an unexpectedly small rise in new claims for unemployment benefits last week, implying fewer layoffs.

The long-awaited improvement in the labour market should keep incomes growing and bolster vital consumer spending.

Source : Reuters

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