Monday, March 24, 2014

Bird-eye on the Federal interest rates

Fed is about to hike the interest rates next spring, Yellen said last week. On March 19th, the Federal Reserve dropped a pledge tying borrowing costs to a 6.5% unemployment rate and made clear it would rely on a wide range of measures in deciding when to raise interest rates. The Fed also announced a further $10 billion reduction in its monthly bond purchases to $55 Billions. Interest Rate in the United States averaged 6.08% from 1971 until 2014, reaching an all time high of 20% in May of 1981 and a record low of 0.25% in December of 2008. In the United States, the authority for interest rate decisions is divided between the Board of Governors of the Federal Reserve and the Federal Open Market Committee. The Board decides on changes in discount rates after recommendations submitted by one or more of the regional Federal Reserve Banks. The FOMC decides on open market operations, including the desired levels of central bank money or the desired federal funds market rate.

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