On December 16th for the first time in almost a decade, the United States Federal Reserve has raised interest rates by .25 percentage points. (First time since 2006)
It is said that this is a positive sign of faith in that the economy has since recovered from the financial crisis.(I am assuming the recession they were not specific). This is due to strong growth in household spending.(Household spending is the amount of final consumption expenditure made by resident households to meet their everyday needs, such as: food, clothing,durable goods (notably, cars), health costs, housing (rent), energy, transportation, leisure)and buisness fixed investment that gave birth to the decision.It was not all good news though.The Federal Reserve has seen that inflation remained below the goal of 2% due to the sharp decrease in energy prices, It remained fairly confident that this percentage would eventually rise to 2% in the long term. The risks associated with unhastily growth in markets overseas. In the midst of the announcement stocks markets around the world were positive, Dow Jones up 1.3%,CAC 40 Paris rose 2.2%,The Uk up 1.5%,Japan up 1.6%. Banks were also quick to respond, Jp Morgan, Citibank and Wells Fargo have now increased their base lending rate to 3.5% for loans rather than 3.25,The price of commodities have reacted slightly by the change rising and falling back down.The U.S dollar Interest rates are not considered beneficial to stock markets as lending becomes more difficult, This has given the economy a bit of inflation as countries who have borrowed in dollars will have a more expensive debt.
Its encouraging to see economic movement and risks taken with the stock market as there is more "wiggle room", as they are able to make mistakes whereas before the mistakes made were very costly and harmful to stocks.
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