Raised interest rates from Fed and its impact for Cable Industry

2016.12.15

Date: December 15th 2016

The Federal Reserve raised interest rates by 25 basis points in a December statement. This is the first time in the United States to raise interest rates, the second time in 10 years to raise interest rates. The Fed is expected to raise interest rates three times in 2017, more than twice the rate hike expected in September.

The Fed raised interest rates by 25 basis points, the federal funds rate from 0.25% to 0.5% to 0.5% to 0.75%. This will increase the cost of borrowing to households and businesses.

The Federal Reserve's latest economic assessment is as follows: Information from the November meeting shows that the labor market has continued to strengthen and economic activity has grown moderately since mid-year; employment growth has been stable in recent months, unemployment has continued to decline, household spending has grown moderately, Inflation, however, has increased slightly since the beginning of the year, but still below the Fed's 2% longer-term target, partly in connection with the earlier fall in energy prices and the decline in non-energy import prices; Overall, the market-based payroll inflation has increased significantly but remains low, with most of the longer-term inflation expectations based on surveys barely changing.

The marketing research fellow of our own, RMJT Cables Market Analytics and Prediction center, thought that  Cable price of industry including Aluminum bare conductor, overhead insulated cable as well as power cable, will have a slight downward trend but not will last long. The exchange rate of US dollars to Chinese CNY has a minimal impact for cable price, considering with our past experience. The main factor for cable price is the cost of raw material like Aluminum, Copper and Steel.

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