After months of speculation, the US Federal Reserve has finally raised its benchmark interest rate by 0.25%, a collective vote which saw the key rate increase from 0.5% to 0.75%.
While this hike was considered a conservative one, rates might continue to rise at a faster pace in the coming year, due to the new Donald Trump administration.
Members of the Federal Open Markets Committee, who controls the interest rates, are predicting an increase in spending, and up to three rate increments next year. Its forecasts for the next three years are 1.4% in 2017; 2.1% in 2018 and 2.9% in 2019.
Since the global financial crisis, rates have been close to zero. But there is notable progress within the economy that is evident in consumer confidence, housing, jobs and development in manufacturing and services. That said, however, inflation is still expected to see an upswing, as it currently stands below the 2% target set by the Fed.
GDP growth should increase and stabilize at about 2.1% in the next three years, while unemployment rate is predicted to decline to 4.5%.
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