The Fed Raises Interest Rates to 1.25%

The US Federal Reserve today raised interest rates by a quarter of a point to the range of 1% to 1.25%, the second monetary tightening this year, confirming confidence in the Economy.

The decision comes three months after the first rate hike of the year, after holding them at the May meeting, and matches the expectations of the financial markets.

According to the macroeconomic forecast, the institution projects interest rates to be between 1,25 and 1,5% by the end of 2017, which would imply an increase of 0.25 basis points in interest rates. That remains of year.

The Fed, which consolidates the process toward monetary normalization, attributes the tightening of financial conditions to the strengthening of the labor market and the “moderate” expansion of the US economy, as the short-term risks of the economic outlook “Are balanced.”

The agency estimated that labor market conditions have “moderated”, although they remain “solid”, in addition to the unemployment rate has declined. He also said that economic activity continues to expand at a “moderate” pace, variables that the Fed believes will improve as rates increase.

In this regard, and in a context in which the dollar has fallen almost 3% since mid-May, ETF Securities analyst Martin Arnold said that the US currency could weaken further with this rate hike.

The US job market generated 138,000 new non-farm jobs last May, while the unemployment rate stood at 4.3%, the lowest since May 2001, according to data from the US Department of Labor .

However, the economic expansion of the United States reached 1.2%, after having revised the data from 0.7% previously noted. Also, annual inflation in April stood at 1.9%, with monthly inflation falling by 0.1%.

The next meeting of the monetary body will be held on 25 and 26 July.

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