The United States can look at the future with confidence after nine years
Interest rates increased for the second time this year by the FED reserve officials and they forecast that they will probably increase them another four times in 2018. The unemployment is sliding down and inflation overshoots their target faster than they anticipated.
“It took almost nine years of slow recovery for the United States to finally show growth potentials with a pace of 4%. Inflation steady went up to official target and unemployment is at the lowest that we see in this century. “
Bigger gains in productivity and salaries remain the important tasks for the US central bank, although the main goals of stable prices and the full employment have been completed.
The fact that Fed held interest rates very close to zero for years with that causing them to lose almost $3.5 trillion in bonds, in an exceptionally risky effort to boost the recovery, did not eliminate the dangers. The risks are still there due to the fact that prices did not respond to the enormous monetary stimulus neither job market cooled when the Fed began their tightening policy.
Fed Chair Jerome Powell on Wednesday stated that the economy was in “great shape” and he feels that they are no longer affected by the fear of slipping back to zero interest rates.
“I think we are far enough away now though that the risks are kind of balanced,” he said. “I think it’s more just, we are just looking at the economy and what does it need and how do we sustain the expansion, keep the labor market strong and try to keep inflation near 2 percent.”
This optimistic and steady expansion of United States economy can characterize as the second longest in the country’s history.
Bloomberg. “The S&P 500 Index of U.S. stocks fell after the Fed decision before rebounding, while benchmark 10-year yields ticked up to 2.98 percent from Tuesday’s 2.96 percent. The Bloomberg dollar spot index, which tracks a basket of global currencies against the greenback, temporarily rose after the FOMC statement and was little changed on the day at 3:19 p.m. New York time.”
With the US interest rates hikes gradually growing we can observe a minor more aggressive pace that makes the officials be more urgent for a tighten policy, as unemployment already fell in May and meet their targets.
Now in the immediate future, one can say that minor obstacles cannot stand in the way given the government's $1.8 trillion in combined tax cuts and planned to spend.
About the Author:
Marios Athinodorou is TeleTrade’s market analyst and commentator. Apart from being an experienced trader, Marios is an advanced technical analyst and is interested in trading psychology. He has 7 years of trading expertise in Forex and CFDs, providing insights to share with all kinds of traders, from beginners to experts. Among others, Marios is delivering weekly trading webinars. Sign up for upcoming webinars, here.
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