US Interest Rates To Rise And Rise, Promises The Fed

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Written By Mostafa Moradi

Interest rates are set to rise several times in the United States until 2019, according to Federal Reserve chair Janet Yellen.

The feisty boss of the American central bank is on a collision course with incoming president Donald trump, who accused her of manipulating interest rates to discredit his economic policies in the run-up to his election.

Now, Yellen already expects to lose her post to a Trump loyalist but has chosen the eve of his inauguration to give a state of the economy speech to the nation.

Without mentioning she is outdoing Trump or has an axe to grind, her comments have undermined whatever economic policies Trump may outline in his plans for the nation.

The Fed last raised interest rates in December, by 0.5% to 0.75%.

The previous increase had been a year earlier.

Trigger for growth

“Last month I and most of my colleagues were expecting to increase our federal funds rate target a few times a year until, by the end of 2019, it is close to our estimate of its longer-run neutral rate of 3%, a level which neither presses on the gas pedal so the car goes faster, nor eases off so the car slows down,” she said.

“Right now our foot is still pressing on the gas pedal. Our foot remains on the pedal so that we can make sure economic expansion remains strong enough to withstand an unexpected shock.”

Trump plans to trigger more growth in the US by cutting taxes, aiding business by slashing red tape and investing in infrastructure projects.

Concerns of the money men

The US economy is in a good state, with a strong dollar, businesses thriving and unemployment falling to 5%.

However, Trump has worried the money men with his protectionist talk.

Where British Prime Minister Theresa May announces she is outward looking and ready to do business with the world, Trump speaks about walls, tariffs and China stealing US jobs.

His mantra has been about making America great again, but the skeleton arguments he put forward as a campaigner for the role of president lacked detail.

Hopefully, the world can pick over his policies following his inauguration.