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  • Writer's pictureICMSS

The Fed to Raise Interest Rates Gradually

Federal Reserve Chairman, Jerome Powell, just delivered the semi-annual Monetary Policy Report to the US Congress on July 17th 2018. The report consisted of three main economic activities which have made a solid pace over the first half of 2018. In the report of US’ economic and financial development, labour market continued to strengthen by the increased of payroll from US$ 180,000 per month in 2017 to US$ 215,000 per month in the past 6 months. The unemployment rate edged down from 4.1% in December 2017 to 4.0% in June this year.

"The best way forward is to keep gradually raising the federal funds rate," said Powell in testimony before the Senate Banking Committee. Over the first half of 2018, Federal Open Market Committee (FOMC) has continued to gradually reduce monetary policy accommodation. FOMC raised the target range for the federal funds rate, which reflected the strong performance of US economy. The payment of interest on balances held by banks in their accounts at the Federal Reserve has played a key role in carrying out these policies, as the Monetary Policy Report explained.