“We don’t have any choice but to continue to live with the uncertainty of the financial future.”—Bill O’Reilly, Fox News contributor The latest on the Federal Reserve’s decision to start raising interest rates next month and the U.S. presidential election (all times local): 6:20 p.m.
New York Fed Chairman Ben Bernanke says the Fed will begin raising interest rate expectations on Friday, with the goal of hitting the benchmark rate for a second time this year.
That will likely be a move to spur longer-term borrowing, with a potential $400 billion increase in the unemployment rate.
The decision will be taken by the Federal Open Market Committee in a closed-door meeting on Thursday.
Overnight, President Donald Trump said the Fed was “doing the right thing” by raising rates.
Trump tweeted that the Federal Deposit Insurance Corp. would increase interest rates on deposits of up to $10,000 for two years.
The central bank will begin charging banks with the costs of keeping deposits longer than three months in a bid to spur lending.
The Fed is also looking to raise short-term interest rates by 1 percentage point or so for borrowers with large balances.
We have no choice but that we will continue to Live with the Uncertainty of the Financial Future.—President Donald Trump, TwitterThe Federal Reserve raised interest rates for the first time since 2009 at its quarterly meeting Tuesday, setting off a firestorm of criticism and protests from both Democrats and Republicans, who have complained the move is too low.
In a statement issued by the Fed, Bernanke said the goal is to have the central bank raise interest rates in the near term and have them stay at that level for a period of time.
“We have no other choice but do what we need to do to prevent a recession and stabilize our financial system,” Bernanke told the House Financial Services Committee.
Bernanke has been in office since 2011.
The economy is projected to grow 3.3 percent this year and 2.6 percent in 2019, down from an earlier forecast of 2.7 percent and 2 percent, respectively.
The Federal Reserve has also signaled it may raise rates next year, as well as in 2020 and 2021.
The U.K. and the Netherlands have already begun increasing their rates, and the Swiss central bank on Wednesday signaled it would start its own move toward a rate hike in October.
The Bank of England has also been raising rates, but not nearly as aggressively as the Fed.
A decision to raise rates this year would represent a significant increase in policy rate.
While Bernanke did not explicitly predict that rate hikes would occur, he said it would be “an unusual event.”
“The decision is to raise the target range for the Fed’s overnight lending rate to a range of 1.25 percent to 1.5 percent over the next few years to reduce the risks of financial instability,” Bernekes statement said.
“The rate decision will take effect in October, with initial rates of 0.25 to 0.5 basis points rising to 0 to 1 basis points and then gradually falling to zero over a two-year period.”
Bernanke, who has also indicated that he would raise interest rate targets in the future, was a prominent critic of the Federal Housing Finance Agency during the financial crisis and was one of the few prominent officials to push back against the administration of then-President George W. Bush, which he blamed for the housing bubble.
Bernekers announcement came just days after Trump, who was elected on a platform of “zero tolerance” on illegal immigration, took to Twitter to call the Fed “very good” and accused it of “setting up a very bad system.”
Trump’s campaign also criticized the Fed on Wednesday, with campaign spokesman Jason Miller calling the Fed an “untrustworthy institution.”
“They’re taking trillions of dollars from Wall Street.
I don’t know what they’re going to do with it,” Miller said.
Trump has repeatedly said the U,S.
and other countries should not allow people to cross the border illegally.
He has also argued that the U.,S.
government has no right to dictate how the country should deal with the situation.