The United States Federal Reserve had announced for the first time in nearly a decade that they would be increasing the interest rate of borrowings and loans. Last month the Federal Reserve was one of the most closely monitored and watched institution for its plan to stimulate the economy further than its existing condition. Markets saw an immediate hike in the market points on the announcement of this news. Some analysts however, feel that the rate hike was too much too soon.
The Fed rate hike
Many analysts believe that the hike in interest rates should have been gradual and slow instead of a large dose of stimulation. The move to hike interest rates came after the global economy seemed to have been growing. It was also encouraged by the steady growth in American jobs and the American economy. The S&P 500 index has also fallen by nearly 10 percent after the central bankers met and deliberated in December last year. The United States now looks forward to a 2.4 percent growth rate in their national economy, however, experts state that it could be watered down by the nation’s fragility, the rate of expenditure and unemployment rates.
There are further rounds of deliberation yet to be undergone by the Federal Reserve committee. Experts suggest that the economy is still quite fragile, and the load on the interest rate cannot be too heavy, or else the American economy could collapse all together, making the resilience from that state a virtual impossibility. Market speculators also seem to be focusing and stating that there could be a possible revision in the interest rate sometime in the month of March this year. It could be another onerous move according to quite a few economists and financial analysts.
Ominous new-year beginnings
The Federal Open Market Committee had presided upon the meetings in the middle of December last year wherein they made the judgment and call on raising interest rates based on the evidence of the employment market, which was the primary source, or reason of all proceedings. Liberal economists still believe that it is not the right time to hike up interest rates. Most believe that the Federal Reserve ought to give the natural growth of the economy a little more time for the economy to grow naturally under the already existing monetary policies.