No changes made by Fed to interest rate, although an end-of-year hike is likely

Image Credit: William Warby

On Wednesday, 21 September 2016, the U.S. Federal Reserve made no changes to the interest rates, but implied that an increase is likely to happen at the end of the year. This hold is for the sixth consecutive time, and the focus is currently shifted to December, where it will be the Fed’s last chance for interest rate growth in 2016.

Policy makers are predicting two rate hikes in 2017, a decrease from the expected three since June this year. Currently, the Federal Open Market Committee (FOMC) has kept the target range for the federal funds rate at 0.25% to 0.5%. And while inflation is expected to stay low for now, a 2% rise is expected over the medium term (estimated around 2018). On a long-term outlook, interest rate projection by policy makers have declined to 2.9% from 3% earlier in June, indicating that rates are unlikely to have a steep increase.

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