Spain – United States
The Federal Reserve increased interest rates by a quarter of a point on March 16, which places the price of money in the US within a range of 0,75% to 1%.
This is the first rate hike since Trump took office. Although it was an expected move, it deepens the divergence with the European Central Bank's monetary policy, raising concerns about the potential for financial turbulence. The Fed has raised rates three times in the last 15 months. The first increase was in December 2016, after six years of near-zero rates implemented to address the international financial crisis. This week's hike did not surprise markets, as Fed Chair Janet Yellen had generated expectations of intensifying the monetary normalization process. In fact, two more rate hikes are expected before the end of the year. Fourteen of the seventeen members of the Fed's committee believe that the average interest rate will end the year at 1,5% and will exceed 2% in 2018. This decision is a clear sign of the central bank's confidence in the strength of the economic recovery of the world's leading economy. Economic activity continues to expand at a moderate pace, growing 1,6% in 2016, and the unemployment rate fell to 4,6% in February, the lowest rate in nine years. Furthermore, inflation is approaching the 2% target that the Fed has been pursuing for months. Adding to this scenario are Trump's announced plans to implement tax reform, which could accelerate inflation more rapidly than anticipated.
Source: CESCE
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