The last time Fed raised interest rates was in 2006. It hadn’t done so since then because of its concerns about the US’s fragile economy (especially after the Yuan crisis) and low inflation. In fact, Fed would like the US inflation rate to be closer to 2%– 1.8% more than it currently is.
The markets stumbled a little after Fed’s decision. The Dow Jones was down 0.39%, the S&P 500 was down 0.26% and the Nasdaq was up 0.1%.
“It is good news that the Federal Reserve did not raise interest rates today. At a time when real unemployment is over 10%, we need to do everything possible to create millions of good-paying jobs and raise the wages of the American people. It is now time for the Fed to act with the same sense of urgency to rebuild the disappearing middle class as it did to bail out Wall Street banks seven years ago.” (Vermont Senator and 2016 presidential candidate Bernie Sanders)
US Senator and Democratic presidential candidate Bernie Sanders speaks to a crowd of supporters at the historic black Benedict College on 12 September. Photograph: Richard Ellis/Corbis
AFL-CIO President Richard Trumka expressed similar sentiments as did Sanders: “We are pleased that the Federal Reserve has kept interest rates unchanged. We know the economic recovery still has not reached working families and even a small increase can have devastating effects on our economic stability.”
“The Fed’s decision was not unanimous – as it normally is – with Jeffrey Lacker, president of the Fed’s Atlanta regional bank, casting a vote for an increase. Lacker had pushed for the Fed to begin raising rates by moving the federal funds rate up by a quarter-point.” (Rupert Neate)
by Alexandre B.