(by Geck Finn, FinanceGates.Com)

On Tuesday the U.S. Federal Reserve lifted its interest rate by a quarter point to 1.5 per cent. U.S. economic decline is determinative in tightening monetary policy.

Some analysts forecast that Fed would give itself more flexibility in its policy guidance after the statement on U.S. employers which have given only 32,000 jobs in July. Despite of weaker economy data rate increase was quite predicted.

The yield on the two-year Treasury note boosted 10 basis points to 2.54 per cent following the announcement and the 10-year yield boosted 5 basis points to 4.3 per cent. The S&P 500 rose 1 per cent, the dollar became stronger.

The possibility of September increasing rate was lifted by the investors from 50 to 70 per cent. Officials state inflation remains under control.

According to the Labor Department’s data productivity of labour grew at a 2.9 per cent annual rate in the second quarter in the non-farm business sector, it is slower than the 3.7 per cent in the first quarter but above expected 2 per cent rate. Unit labour costs boosted at a 1.9 per cent rate in the second quarter as it was expected earlier.