The Federal Reserve, which raised its benchmark rate on Wednesday for the second time in three months, this time to a range between 0.75 percent and 1 percent, is finally moving toward the end of its nine-year-old economic stimulus campaign, which began in the depths of the financial crisis.þþBut Janet L. Yellen, the Fed’s chairwoman, said at a news conference after the decision was announced that the Fed did not share the optimism of stock market investors and some business executives that economic growth is gaining speed. It still plans to move slowly because the economy continues to grow slowly. She suggested that the Fed would have plenty of time to adjust its plans should President Trump and Congress cut taxes or spend massively on infrastructure.þþHer announcement was full of confidence. But it certainly was not ebullient. “The data have not notably strengthened,” Ms. Yellen told reporters. “We haven’t changed the outlook. We think we’re moving on the same course we’ve been on.”þþThe Fed said that the United States economy continued to chug along, expanding at a “moderate pace.” Employers are hiring, consumers are spending and businesses — the laggards in recent months — are starting to plow a little more money into their operations, too.þþþThe Fed’s sobriety did not appear to make much of an impression on investors. The stock market’s heady march that began after Mr. Trump’s election continued apace. The Standard & Poor’s 500-stock index rose 0.84 percent to close at 2,385.26 Wednesday, moving up sharply after the announcement. Some said the Fed was still a long way from doing anything that might hurt.þþ“The first four to eight rate hikes are the low-hanging fruit,” said Deron McCoy, the chief investment officer at SEIA, a Los Angeles firm. “The real test will be whether the economy can withstand positive real rates. And that still seems to be a 2019 topic.”þþSome analysts said the Fed will want to see an impact from its actions. “Policy makers hike rates to tighten financial conditions,” said Ellen Zentner, the chief United States economist at Morgan Stanley. “If this easing of financial conditions on the back of today’s hike are sustained, that would tell policy makers they need to do more.”þþMs. Zentner said she expected the Fed to raise rates again at its June meeting. The Fed’s policy-making committee next meets on May 2 and 3.
Source: NY Times
