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Federal Reserve raises rate


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https://www.washingtonpost.com/news/wonk/wp/2015/12/16/federal-reserve-likely-to-raise-interest-rates-for-first-time-in-nearly-a-decade/

 

 

The unanimous decision will nudge the central bank's benchmark interest rate up from near zero by a quarter of one percent to a range of 0.25 to 0.5 percent. The move is small, but it amounts to a vote of confidence that the American economy -- dogged by volatile oil prices, a slowdown in China and weak global growth -- will stand resilient. But the Fed also pledged to wean the nation off its stimulus slowly, an acknowledgement that further progress is not guaranteed and that the central bank is operating in uncharted territory.

 

"I feel confident about the fundamentals," Fed Chair Janet Yellen told reporters after the vote. "We have been concerned  about the risks from the global economy. Those risks persist, but the U.S. economy has shown considerable strength."

 

Markets rose after the announcement of a rate hike. The Dow Jones industrial average and Standard & Poor's 500 index were up around 1.5 percent by the end of Yellen's press conference.

Edited by trottigy
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The number of Americans filing for unemployment benefits last week fell from a five-month high, suggesting sustained labor market healing that could lead to further Federal Reserve interest rate hikes next year. Initial claims for state unemployment benefits dropped 11,000 to a seasonally adjusted 271,000 for the week ended Dec.12, the Labor Department said on Thursday. The prior week's claims were unrevised.

 

It was the 41st straight week that claims remained below 300,000, a threshold associated with strong labor market conditions. That is the longest such run since the early 1970s.

 

"The labor market continues to stay tight with demand for workers strong and pockets of actual shortages in many industries. The Fed has achieved the employment part of its dual mandate and this is what triggered the rates liftoff yesterday," said Chris Rupkey, chief financial economist at MUFG Union Bank in New York.

http://www.reuters.com/article/us-usa-economy-idUSKBN0U01UE20151217

 

Come on - some one say "Security!!"   :wave:


Edited by trottigy
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This will also affect the interest rates that are used to calculate a pension plan lump sum disbursement. If anyone plans to retire soon and their pension plan offers a lump sum and they plan to take the lump sum, the lump sum gets smaller as interest rates go up.

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