U.S. Fed Raises Rates For First Time In Nine Years – -Federal Reserve Ends Zero-Interest Rate Policy
With the announcement by the Federal Reserve that it is raising its interest rate by 25 basis points, a policy of virtual zero-interest rates maintained by America’s central bank–and imitated by other central banks worldwide since the global economic and financial crises that arose in 2008–has officially come to an end. The minor rate increase of 0.25 percent is the first time since 2006 that the Fed has upped its benchmark interest rate.
The end of the extraordinary and long-lasting monetary easing aggressively maintained by the Fed for nine-years thus comes to an end, the justification being that the policy “worked,” the evidence being a very minor rise on forecasted future GDP growth prospects for the American economy. The decision by the Fed to raise its interest rate has supposedly been priced in by the equity markets for probably the last two years, at least. Nevertheless, the continued weakness in the global economy may provide a lesson in how fragile it really is, once the monetary pump-priming of zero-interest rates is gone.
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