The week in finance: 17 March 2017

The US Federal Reserve (“the Fed”) increased interest rates

For the second time in three months, the Fed increased its target interest rate. This will slightly push up the cost of borrowing money in the US for many people and businesses, which could act as a moderate headwind to economic growth.

Relatively strong US economic growth in recent months have given the Fed confidence that the US economy can withstand slightly higher interest rates. If the economy turns sour, the Fed will now have more room to cut interest rates in order to help stimulate growth.

What happened in Britain?

The unemployment rate in Britain hit its lowest level since 1975 in February (according to data released this week)! It’s generally a sign of an improving economy when more and more people are getting jobs, as is the case in Britain.

However, wage growth fell to its lowest level in almost a year. This is unusual as more demand for workers is supposed to push up wages; it may be happening because more people are taking on lower quality jobs that pay them less (e.g. claiming they are “self-employed” when they are really “underemployed”). If so, that’s not as good a sign for the economy.

And finally…

Canada Goose, the purveyor of the hugely popular winter jackets, became a publicly traded company this week – it’s valued at about $2bn. Also, Intel, the American computer chip maker, bought Mobileye, an Israeli company that develops technology for driverless cars.

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