US & UK Signal Turning Point in Financial Stability
For the first time in seven years, the Federal Reserve raised the federal funds rate. The rate, which has remained at zero since the 2008 financial crisis, was increased to a range of 0.25 percent and 0.5 percent on December 16, 2015. The decision reflects optimistically on the stability of the United States (US) financial system. Chair Janet Yellen delivered remarks at a press conference following the Federal Open Market Committee’s (FOMC) meeting on Wednesday. She said, “This action marks the end of an extraordinary seven-year period during which the federal funds rate was held near zero to support the recovery of the economy from the worst financial crisis and recession since the Great Depression. It also recognizes the considerable progress that has been made … and it reflects the Committee’s confidence that the economy will continue to strengthen.”
The United Kingdom (UK) similarly recognized the recovery of its financial system earlier this month. On December 1, 2015, the Bank of England (BOE) assessed that the financial system was “in sight of where it needs to be.” Global markets and bank shares responded positively to both announcements.
Yellen’s Press Conference Remarks: