Fed moves to prevent U.S. economy from overheating

by Ben Pena March 24, 2018, 12:35
Fed moves to prevent U.S. economy from overheating

Jitipol said that this year, the direction of the baht is more likely to be determined by the state of worldwide trade and the economic expansion of Thailand's trading partners, rather than on the interest-rate gap.

While the Fed is "very alert" to any increases that could result from the very low unemployment rate, which normally would be expected to drive wage increases, "it's not something we observe at the present".

Members of the Federal Open Markets Committee, the body that votes on rate changes, forecast that the United States economy will grow by 2.7% in 2018, above the 2.5% predicted in December 2017. It also said it will keep shrinking its bond portfolio. The London Interbank Offered Rate, which is the rate at which worldwide banks lend to each other and serves as a benchmark for lending rates, has risen for more than 30 consecutive sessions and is at its highest since the financial crisis.

Taken together, the Fed's actions and forecasts suggest a belief that the economy remains sturdy even almost nine years after the Great Recession ended.

"The market will have to get to know Jerome Powell a little bit and will have to test his credibility as Fed chairman", he said.

There have been positive technical signs including rebounds in the prices of big-cap stocks in the energy and petrochemical groups, as well as for mid-cap stocks, following rises in the SET Index, he said.

Earlier, European markets avoided major swings, with Frankfurt ending flat and London and Paris both down modestly.

The Dow, having initially jumped as much as 250 points, ended down 44.

United States accuses China of stealing patents in WTO complaint
The proposed product list will include items in aerospace, information and communication technology and machinery. He added, however, that while the decision represents progress, talks with the USA still need to go forward.

The broad-based S&P 500 lost 0.2% at 2 711.93, while the tech-rich Nasdaq Composite Index declined 0.3% to 7 345.29. Volume rose from Tuesday's levels, according to preliminary figures.

But among the Fed officials who met in Washington this week, Powell said, "there's no thought that changes in trade policy should have any effect on the current outlook".

"If I venture a prediction, there might be a four rate hikes in 2018", Stern NYU Professor of Economics Nicholas Economides said Wednesday during an interview on FOX Business' "Countdown to the Closing Bell".

Back, in 2015, Federal Reserve Chairwoman Janet Yellen made news when she announced the bank would increase the federal funds rate to a range between 0.25% and 0.5%.

The central bank's preferred price gauge rose 1.7% in the 12 months through January and officials projected it to rise to 2% in 2019 and hit 2.1% the following year, the latest estimates showed. Trump appointed Powell to the position. Powell said he's "carefully considering" expanding the number of such briefings where he explains Fed decision, cautioning that he wanted to be sure that didn't send any signals about the path of policy. Investors also fixated on the Fed's somewhat more aggressive plans for rate hikes after 2018, analysts said. Fed representatives now utter an upsurge from their former prediction done prior to the Republican tax cuts was concluded. In fact, it expects to raise interest rates three times in 2019, which is an increase from the two hikes in 2019 that was forecast in December.

Those higher estimates may reflect the expected impact of the additional government spending.

February 2018 brought a national unemployment rate of 4.1 percent, a 17-year floor, making the streak continue for its fifth consecutive month.


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