The Federal Reserve announced a quarter-point rate hike Thursday, prompting the value of the United States Dollar to decrease.
The hike raises the rate from 1.5 percent to 1.75 percent, according to the BBC.
Jerome Powell, chair of the Federal Reserve, also said in a statement that President Donald Trump’s planned steel and aluminum tariffs and Chinese sanctions might ignite a trade war, according to the BBC, describing it as a “risk to outlook.”
The dollar index fell 0.65 percent Thursday following the rate hike announcement, according to CNBC, bringing it down to 89.78. The sterling pound is now valued at $1.41, while the euro is valued at $1.23. According to Forex brokers trading in currencies, the Australian dollar is worth $0.78..
The Canadian dollar and Mexican peso also rose after the announcement that the United States would drop an auto request as part of the renegotiation of the North American Free Trade Agreement.
The Federal Reserve had long assured investors it would issue the hike, the first in three planned rate hikes in 2018, according to MoneyControl, in order to help slow down a rapidly growing economy and minimize the risk of inflation.
The Federal Reserve Committee also issued a statement saying the national economic outlook has improved in recent months due to low unemployment and greater-than-anticipated job growth, according to CNBC.
The committee said it anticipates moderate growth and strong labor market conditions as long as it continues on its current path. The committee also updated its anticipated end-of-year economic growth to be 2.7 percent, up from 2.5 percent.
The Federal Reserve also said it would upgrade its number of anticipated 2019 hikes from two to three, according to MarketWatch. It also updated its prediction for the rate at the end of 2019 from 2.7 percent to 2.9 percent.
The Federal rate hike is expected to raise credit card interest rates, long-term fixed mortgages, and some student loan rates. Those with student loans should consider examining refinancing, Credible.com CEO Stephen Dash said according to CNBC.
Auto loan interest rates are unlikely to be affected by the rate hikes.