Financiera

Fed payments to Treasury fell in 2017 due to interest rate hikes

Fed payments to Treasury fell in 2017 due to interest rate hikes

The central bank could use the profits of its bond holdings to cover its own operating expenses and sends the rest to the U.S. Treasury. He also expressed confidence that inflation will continue to tick up until it meets the Fed's 2 percent goal for healthy growth.

The Treasury Department updated its rules for tax withholding from paychecks, changing calculations so most workers will start getting more take-home pay in February as a result of the recently passed tax law.

It slashes corporate income tax by 14 percentage points and reduce individual rates mostly for higher-income households in what the administration argues will boost both business and consumer spending.

Analysts pinned the latest rise on core inflation in the US accelerating ahead of expectations from 1.7pc to 1.8pc year on year in December, even though the headline figure slipped back from 2.2pc to 2.1pc. That means private investment could be crowded out, possibly eclipsing benefits from capital spending and potential output.

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For the long term, he warned not only of the costs the tax cuts will impose on the deficit but also damage down to high-end housing by elimination of state and local property tax deductions.

Federal Reserve Bank of New York President William Dudley said there is still a robust case to support interest-rate increases amid risks the economy could overheat, while warning that the new tax bill could present problems over time.

Dudley repeated he expects prices to rebound this year toward the target, and said 2018 should be "a good year" for the economy.

Despite his longer-term pessimism, Dudley raised his outlook for 2018 GDP growth from 2.5 percent to 2.75 percent. "The legislation will increase the nation's longer-term fiscal burden, which is already facing other pressures, such as higher debt service costs and entitlement spending as the baby-boom generation retires".