Federal Reserve Announces First Hike In Short-Term Interest Rates Since 2006
As expected, the Fed raised interest rates for the first time since 2006 today. The US economy has seen relatively robust growth this year and unemployment is at half its Q1 2010 peak. On the other hand inflation remains well below target, and global risks are on the downside. The move is likely to be the first in a relatively gradual process of tightening with economists expecting up to 4 further increases in 2016. Although the arguments in favour of the rise are seemingly strong, I would counter that the increase could well have come too soon. With emerging markets continuing to struggle, and China in particular still slowing, a rate rise now could have a negative impact on the far-from-robust global economy.