By Zacks.com
The Federal Reserve took the investor community by surprise when it announced Wednesday that the central bank intends to raise benchmark interest rates at some point this year as it believes that the U.S. economy is improving steadily.
Ever since the Fed ended its six-year long quantitative easing program in October last year and hinted at increasing the short-term fund rate in 2015, investors have been speculating about the timing of the planned interest rate hike.
However, the Fed claims to remain “patient” in determining when to finally raise the benchmark borrowing costs from zero for the first time since the 2008 financial crisis. In making the statement, the Fed said it would consider the sluggish economies of Asia and Europe before taking the final call. Moreover, low inflation and a strong dollar are the deterrents to a quick raise. Fed officials indicated that the first rate hike would happen around June.
