With the Federal Reserve’s announcement that interest rates are to be raised by .25 percent, it seems the U.S. economy is finally ready to break free. The rise “is a vote of confidence in the economy,” Federal Reserve Chair Janet Yellen told reporters.
The fact that the Fed no longer believes banks need easy access to cheap capital signals the economy could finally be prepared to enter a period of growth. The Fed’s decision comes at the end of a year which saw a healthier economy than the years immediately preceding it, providing the opportunity to raise interest rates and avoid inflation without causing widespread economic pain.
The rise “is a vote of confidence in the economy.”
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The announcement also comes during a record stock market boom. The Dow Jones rose by over 50 points on Wednesday for a brief, record high. Both the Dow and the S&P 500 have been performing incredibly well since Donald Trump’s victory in the general election.
Not only do investors appear to have exponentially more confidence in the U.S. economy than they did six months ago, but corporations also seem to have renewed confidence in America’s economic prospects.
On Tuesday, IBM announced it is hiring 25,000 workers in the U.S. “We are hiring because the nature of work is evolving — and that is also why so many of these jobs remain hard to fill,” IBM CEO Ginni Rometty wrote in an official statement. Rometty said the company will invest $1 billion in training and developing new talent within the U.S.
But although the signs are good, they are no guarantee of a new golden economic age. “We are operating under a cloud of uncertainty at the moment,” Yellen said to reporters on Wednesday after announcing the raise in rates.
Whether or not the American economy truly does take off will have much to do with Congress and the sort of policies Donald Trump is able to implement. “This statement and forecasts constitute something of a holding operation, pending action from Congress,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, told The Wall Street Journal.