- Janet Yellen, Fed Chairwoman
The number of Americans filing for unemployment benefits fell last week, a sign of the labour market's health. Initial jobless claims declined by 11,000 to a seasonally adjusted 271,000 in the week ended December 12, the Labor Department reported. Economists, however, had expected 275,000 new claims last week. Claims data is often volatile during the period between the Thanksgiving and New Year's holidays. The four-week moving average of claims, which irons out weekly ups and downs, dropped by 250 to 270,500 last week. Claims had fallen steadily since 2009 until this year, when they hit the lowest level in four decades in mid-July. In November, employers created a seasonally adjusted 211,000 jobs and added a robust 298,000 in October, suggesting the job market gained traction this fall.
Earlier in the week, the Fed signalled its growing confidence in the world's number one economy and announced its first rate hike in almost a decade. The Fed raised its target for the federal funds rate, the rate at which banks lend money to one another, from 0% to 0.25%. By the end of next year, the US central bank expects the benchmark interest rate to climb to a median 1.375%, which implies four more 25 basis points increases over the coming 12 months. In 2017, officials are aiming to bring the policy rate up to 2.375%, which will take another four hikes.
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