New Delhi [India], Mar 16 : The Federal Reserve on Wednesday increased its benchmark interest rate a quarter point amid rising confidence that the economy is on the path of robust growth.
It for the second time in three months that the Fed has increased its interest rates, which is widely anticipated by the financial markets as it has taken the overnight funds rate to a target range of 0.75 percent to one percent and set the Fed on a likely path of regular hikes ahead.
"The market was bracing for a much more hawkish tone from the Fed. The early reaction looks to be one of relief, that the market's worst fears were averted," said Michael Arone, the chief investment strategist at State Street Global Advisors.
On Monday, Federal Reserve Chair, Janet Yellen, issued a letter to inform the senior House Republicans that her June meeting with a financial analyst had no links to the October leak of confidential interest-rate information in 2012.
Yellen said that she met the analyst, Regina Schleiger of Medley Global Advisors, on June 11, 2012, to discuss general financial matters. This meeting was several months before Medley's revelation of October 3, the day Medley informed the clients about the consensus reached by the Fed policymakers on launching of an additional round of bond purchases, to stimulate economic growth.
According to experts, the euro dropped owing to uncertainty over whether Greece and its international creditors will strike a deal that will be helpful for Athens to secure funding before it runs out of money by April 20.
Discussions continued through the weekend on reforms to open loans and Athens sounded an upbeat tone. But according to lenders, it might take several days before an appropriate list of measures was ready. The dollar climbed broadly and was helped by comments from Federal Reserve chair Janet Yellen.
Yellen highlights the view that the Fed will possibly begin raising interest rates gradually later this year. The dollar mounted up 0.3% to 119.50 yen and the euro dropped 0.6 % to $1.0830.
The National Association of Business Economists conducted a survey in which 293 economists took part. As per them, the Federal Reserve can increase interest rates in the second half of the year.
However, it has been noticed that uncertainty over the plans is no affecting the US economic growth. As many as 71% of the total economists who took part in the survey said that they do think that the Federal Open Market Committee will increase the federal funds target rate this year.
Since the end of 2008, the rate has been almost zero. Experts do not think that even if the Fed takes time to increase the rate, it will have much impact on the pace at which economic recovery is taking place.
It seems that Janet Yellen, an American economist, who is said to be currency traders' best friend, is turning to their biggest enemy.
The most-popular trade in the $5.3 trillion-a-day foreign-exchange market has been betting on a stronger dollar, leaving investors exposed, after the Federal Reserve chair denied speculations last month of an expected increase in interest rates.
Now as the dollar slowed its advance, an index of currency returns snapped record prompting traders to reassess how much higher the greenback can go.
Indian rupee suffered its biggest single-session drop against the U. S. dollar in around two months on Thursday, after the U. S. Federal Reserve chief Janet Yellen indicated an earlier-than-expected end to the quantitative easing program that was launched to stimulate the world's biggest economy in wake of global economic crisis.
The Indian currency slipped by 37 paise against the U. S. dollar to close at 61.33 per dollar on Thursday. On Wednesday, the local currency had closed at 60.96 per dollar.
The US Federal Reserve has said that it is planning to set a guidance policy for the interest rates in the US economy as the threshold for unemployment passed.
The central bank had kept monetary policy easy and had assured market that the interest rates will remain low until unemployment exceeds 6.5 percent and the outlook for inflation is no more than 2.5 percent. The US central bank had said that it will not increase interest rates until joblessness fell to at least 6.5 per cent in the US economy.
The Federal Open Market Committee (FOMC), the key monetary policy making panel of the US Federal Reserve, has officially chosen Janet Yellen as its new chair.
The central bank of the world's biggest economy has said in a statement that its Federal Open Market Committee unanimously selected Yellen to replace Ben S. Bernanke.
Janet Yellen has been confirmed as the new chairman of the Federal Reserve, however her appointment was backed by the least Senate support on records indicating that the central bank is facing internal differences.
Experts have said that the central bank is still facing scrutiny from political leaders even six years after the financial crisis. The senate voted 56-26 to confirm Yellen as the new head of the central bank, indicating that she received least support from the leaders.
The U. S. Federal Reserve is going to exit the list of top power institutions in the country where the top position has never been held by a woman.
President Barack Obama's administration has nominated Janet Yellen to run the central bank.
Yellen remained the governor and president of the Federal Reserve Bank of San Francisco from 1994 to 1997 and from 2004 to 2010, respectively. Currently, she is the vice chairman of the Federal Reserve.
Janet Yellen, vice president of the U. S. Federal Reserve, is widely expected to be the next chief of the central bank as President Barack Obama's former economic adviser Lawrence H. Summers has already withdrawn his name from consideration.
Summers withdrew his name after being targeted by Yellen's supporters who said he was too lenient on regulating the Wall Street.
Janet Yellen, president of the Federal Reserve Bank of San Francisco, is all set to become the next vice chairman of the Federal Reserve Board, according to the sources familiar with the matter. Yellen is the first choice of President Barack Obama for this post. Donald Kohn, the current vice chairman of Federal Reserve Board, will retire in June this year.