The Fed announced a quarter point increase in rates. As reported by Forbes, the Fed is giving strong indications that they have a bullish outlook for the economy. Interest rates are still relatively low and sustainable growth is forecast for at least the next year. Good news for businesses from Main Street to Wall Street.
Highlights from the Fed’s statement (from the Joint Congressional Economic Committee):
* The Fed continues to see the stance of monetary policy as accommodative which means that the Fed still perceives that interest rates remain relatively low to accommodate economic growth.
* The Fed noted that output is growing at a moderate pace despite earlier energy price increases, labor market conditions continue to improve, and inflation along with long-term inflation expectations remain contained.
* The policy statement reiterated the Fed belief that “policy accommodation can be removed at a pace that is likely to be measured.” This language has been used in statements accompanying the past five meetings (May, June, August, September, and November) and is a strong signal that the Fed is not yet finished with interest rate hikes. The Fed began removing policy accommodation at its June meeting when it increased its target overnight interest rate from 1.00% to 1.25%.
* Recognizing strong and steady growth in GDP, continued job growth and marginal upward pressures on inflation, the Federal Reserve is continuing its policy of increasing short-term interest rates at a measured pace.
* The Fed has increased its target overnight interest rate by a quarter of a percent at each of its past five meetings, bringing the target from a low of 1.00% to the current 2.25%.
* Markets expect another quarter point increase when the Fed next meets (February 1-2, 2005).
Previous
Next