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Raising my interest rate

The markets always wait breathlessly for such inelegant statements by the Fed

Photo: iStock
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Photo: iStock

Ashish Sharma
Recently, the US central bank increased the borrowing “interest rate” for the second time in a row. It said, “The committee expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate.” The markets lapped up the statement, especially the “gradual” bit, and started rallying. The markets always wait breathlessly for such inelegant statements by the Fed. On its part, the Fed is often guarded about its intentions, providing broad guidance (“gradual increases”) rather than precise information. If, instead, the Fed announced a target, such as inflation should be 4 per cent,

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