US Fed hikes benchmark interest rate

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Europe

The Federal Reserve raised the benchmark interest rate on Wednesday for the third time this year but showed no indication it would be more aggressive in efforts to head off inflation.

However, Fed chairman Jerome Powell cautioned trade tensions remained a risk to the outlook, including the potential for rising prices, although he indicated it was too soon to tell what impact this will have on the economy.

On the brighter side, Powell said he did not see any "troubling" vulnerabilities in financial markets, even with stocks near their historic highs in some cases.

In a widely anticipated decision, the central bank boosted the lending rate to a range of 2.0 to 2.25 percent, a quarter-point increase in the target range.

The central bank still forecasts another rate hike in December and three more next year.

Shortly after the announcement, US president Donald Trump once again criticized the Fed for raising rates.

"Unfortunately, they just raised interest rates a little because we are doing so well. I'm not happy about that," Trump said at a press conference on the sidelines of the UN General Assembly.

"I would rather pay down debt or do other things," he added. "So I'm worried about the fact that they seem to like raising interest rates."

Asked earlier about Trump's previous criticism of Fed rate hikes which he said could undermine the booming economy, Powell said that the central bank did not take "political factors" into consideration.

The Fed members "try to set monetary policy to achieve maximum employment in a complex of price stability. We don't consider political factors or things like that," Powell told reporters.

Source(s): AFP