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Shoots take root: On Fed hike

The rate increase by the Fed indicates that the world’s largest economy has gained traction

The biggest takeaway from the U.S. Federal Reserve’s decision to raise the federal funds rate, for a third time in six months, is its assertion that growth in the world’s largest economy has gained traction and is on course to warrant further “gradual” rate increases. Fed Chair Janet Yellen emphasised the factors underpinning this rebound in economic activity — an “ongoing improvement in the job market and relatively high levels of consumer sentiment and wealth” that have spurred household spending, an expansion in business investment, and most significantly, a global pickup in demand. This offers more reassurance that the global economy may have finally re-emerged from the post-financial crisis doldrums. It is also noteworthy that the economic revival has been happening amid heightened policy uncertainty worldwide, especially in key areas like trade, as political tumult continues to roil the U.S. under the Donald Trump administration and, more recently, the U.K. as well. And while Ms. Yellen reiterated that the American central bank remained on alert in monitoring inflation developments, given a recent softening in price gains, the Fed’s decision to announce the contours of a programme to gradually pare the size of its $4.5 trillion balance sheet is another sign that the U.S. economic engine is warming up. India’s exporters can take heart that demand in one of the largest markets for their goods and services is likely to continue to strengthen in the coming months. The Fed also bumped up the median projection for U.S. economic growth in 2017 to 2.2%, from 2.1% forecast in March.

Ms. Yellen and her colleagues on the Federal Open Market Committee have also done well to ward off a 2013 ‘taper tantrum’-like scenario by flagging the projected path of balance sheet normalisation — a deliberate and clearly calibrated set of reductions that increase over time — without detailing a schedule for the start of the process. Clearly spelling out that the plan to decrease reinvestment of principal payments from asset-backed and Treasury securities is conditional on the economy staying its anticipated course, the Fed has earmarked this year as the broad time frame for its start. India’s monetary authorities can derive some reassurance that they are not alone in adopting a policy stance that seems counter-intuitive to some in the light of slowing inflation in their respective economies. While the Fed describes its stance as “accommodative” to spur further strengthening in labour market conditions and a sustained return to 2% inflation, the Reserve Bank of India has said that its “neutral” poise is intended to continue support for economic expansion while ensuring price stability. The common theme is the welcome emphasis on consistency and stability in the messaging. 
Source : THE HINDU

IMPORTANT WORDS FROM ARTICLE & THEIR MEANING

1) Assertion (अभिकथन) - Asser-tion
Meaning - a confident and forceful statement of fact or belief - Noun
Synonyms 
- declaration, statement
Antonyms - silence, quiet
Example -
 He made an assertion that he was not responsible for it.
2) Traction (संकर्षण) - Trac-tionMeaning - the extent to which an idea, product, etc. gains popularity or acceptance - Noun
Synonyms 
- absorption, contraction
Antonyms - slipperiness
Example -
 The tires have short metal projections to improve traction on snow and ice.
3) Rebound (प्रतिक्षेप) - Re-bou-ndMeaning - recover in value, amount, or strength after a decrease or decline - Verban increase in value, amount, or strength after a previous decline - Noun
Synonyms - 
recover, rally
Antonyms - destroy, ruin
Example - 
There are signs of an economic rebound.
4) Spurred (प्रेरित) - Spurr-edMeaning - (of a rider or their boots) having a spiked device on the heels for urging a horse forward - Adjective
Synonyms 
- arouse, drive
Antonyms - calm, check 
Example - 
He spurred on his car and went to the office on time.
5) Tumult (कोलाहल) - Tew-multMeaning - a loud, confused noise, especially one caused by a large mass of people - Noun
Synonyms - 
agitation, commotion
Antonyms - agreement, calm
Example - 
The financial markets are in tumult.
6) Reiterated (दोहराया) - Re-it-rate-edMeaning - say something again or a number of times, typically for emphasis or clarity - Verb
Synonyms - 
echo, renew
Antonyms - take back
Example - 
He reiterated the importance of good health in his speech.
7) Deliberate (विचारपूर्वक) - Deli-bray-tedMeaning - done consciously and intentionally - Adjectiveengage in long and careful consideration - Verb
Synonyms - 
calculated, cautious
Antonyms - heedless, ignorant
Example - 
He was deliberate in his speech and action.
8) Calibrated (कैलिब्रेटेड) - Keli-bray-tedMeaning - mark (a gauge or instrument) with a standard scale of readings - Verbcarefully assess, set, or adjust (something abstract) - Verb
Synonyms - 
graded, registered
Example - 
During the concert, the audio technician will calibrate the music to a comfortable listening level.
9) Intuitive (सहजज्ञ) - In-tew-tiveMeaning - using or based on what one feels to be true even without conscious reasoning, instinctive - Adjective
Synonyms - 
emotional, innate
Antonyms - calculated, reasoned
Example - 
He had an intuitive sense of what the reader wanted.
10) Rebate (रिबेट) - Re-baetMeaning - a partial refund to someone who has paid too much for tax, rent, or a utility - Noun
pay back (a sum of money) as a rebate - Verb
Synonyms - abatement, deduction
Antonyms - increase, rise
Example (English) - Dealers are offering rebates on goods to cash in on GST worries.
Example (Hindi) - डीलर जीएसटी चिंताओं को भुनाने के लिए बहुत सी वस्तुओं पर छूट दे रहे हैं।
Now considering the article above as a Reading Comprehension question, try to answer the following -
  • What impact will the rate hike have on retirement savings?
  • What does the rate hike mean for savings account?
Given below are some words to check your vocabulary you can make sentences with those words in the comment section which will be reviewed by us.
  • Intended
  • Emphasis
  • Consistency
  • Stability

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