(Image source from: US Federal reserve hiked interest rate)

In a historic move, US Federal reserve hiked the interest rate for the first time in almost a decade. The Federal policy setting board increased the  benchmark interest rates by 0.25 to 0.50 percent.

The Central Bank pointed out that, steadily, there will be more hikes in the rates.  Janet Yellen, the  Chairperson of the Board of Governors of the Federal Reserve System told, the economy recovery continues and slow rise in interest rates will put the Central bank forward.

"With the economy performing well and expected to continue to do so, the committee judges that a modest increase in the federal funds rate is appropriate,the economic recovery has clearly come a long way,” she said after the rate announced.

James Marple, senior economist at TD Economics,  wrote in a research note that, "The Federal’s expectations for rate hikes next year is set alongside a relatively cautious and entirely achievable economic outlook.”

Reuters’s report shows that, The estimated target interest of Federal policy makers for the year 2016 is remained at 1.375 percent, that shows four quarter- point hikes in rates in the coming year, while, traders who are based on short term interest rate futures markets, anticipate the next interest rate hike in the April.

"The Fed is going out of its way to assure markets that, by embarking on a 'gradual' path, this will not be your traditional interest rate cycle," said Mohamed El-Erian, chief economic advisor at Allianz.

Janet Yellen told, during a press conference that, "Policy remains accommodative." On the other side, a report by Washington post said that, savers will have subsidiary relief due to rate hikes and there will be a gradual  improvement in returns.

Nandini