FOMC’s Rate Hike Will Not Slow President Trump’s Economic Plan

FOMC’s Rate Hike Will Not Slow President Trump’s Economic Plan

FOMC’s Rate Hike Will Not Slow President Trump’s Economic Plan

  • The Powell Fed shows confidence in the US Economy

The Fed’s rate increase Wednesday will not slow President Donald Trump’s economic agenda, but it will make home mortgages more costly.

“I don’t think this is going to affect the economic expansion very much,” economist Peter Morici said in a TV interview, “These are still historically very low rates.”

The Fed raised its core lending rate by a 0.25 pt and forecast a steeper path of increases in Y 2019 and Y 2020, citing an improving economic outlook, the outlook is Dovish.

The hike was the first under Fed Chairman Jerome Powell, whom President Trump nominated to the post in November. His term began last month.

The Fed policy makers, projected at least 2 more rate increases this year because of President  Trump’s tax plan, higher government spending and concerns about rising inflation.

“There was a cautionary note about inflation,” he told Haglund, referring to the board’s statement regarding the rate increase. “The Fed has its eye on that more than before.

“The tax plan and the spending, all of that accelerates growth a bit and makes it more likely that they’ll raise rates a little more quickly.”

For most Americans the Fed increase translates to higher interest paid out on bank savings accounts and more money being paid out for mortgages.

“They’re likely to see more interest paid by banks in the coming months on savings accounts — and they can expect to pay a little bit more for a mortgage,” Mr. Morici said.

“I would expect, overall, that mortgages would become a percentage point more expensive, something in that range.”

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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