U.S. FED is set to raise interest rates from September

U.S. Federal Reserve has reconfirmed its desire to increase the policy interest rate, which is hovering 0 within this year. However, the speed will be adjusted considering the impact to the world economy, according to the federal organization. Experts of the Korean and overseas financial markets predict that the Fed will increase the interest rate once or twice from September to the end of this year.

However, the speed of increase is expected to be gradual. The FED has lowered the U.S. economic growth prospect this year from the current 2.2-2.7 percent to 1.8-2.0 percent. Slow economic recovery serves as a cause to avoid rapid interest rate increase. FED Chair Janet Yellen said, "What matters is the entire path of rates. We do not expect to follow any mechanical 25 basis points a FOMC meeting, 25 basis points every other meeting [plan]. [We have no plan to follow any type of mechanical approach to raising the federal funds rate.”

The remarks are interpreted as that the FED would not raise the interest rate too high at one time or increase the rate consecutively several times, even though the central system is set to lift the interest rate. In 1994, the U.S. raised the benchmark interest rate by 3 percent point within just a year, sending big impact to emerging nations and the global economy. The central organization seems to be committed not to repeat the past error.