As widely expected Federal Reserve raised interest rates on Wednesday, signalling a new era for the USA economy. U.S. economy is almost ideal, retreating from nearly a decade of recession, shifting from stable prices to stable growth. Interest Hikes is only one of the FED’s targets.
With the lowest unemployment rate seen in the last century, Fed made significant efforts although there are still targets to be met.
This rate hike was the seventh in a row and now the policy rate matches inflation.
Fed Chair Jerome Powell expressed his own satisfaction with the recovery, while explains why interest rates are going up for the second time this year.
"The main takeaway is that the economy is doing very well.” Federal Reserve Chairman Jerome Powell explains why interest rates are going up for the second time this year. https://t.co/uRm2sIZzSQ pic.twitter.com/MSRNvXmxwN
— CNN (@CNN) June 14, 2018
“The main takeaway is that the economy is doing very well.”
This is the second-longest US economic expansion in its history. Fed policymakers pointed to two more rates hikes in 2018.
Asian shares dropped after the raising of interest rates by FED. Moreover, the dollar index after early gains following Fed’s latest policy statement finally dipped.
MARKETS following FED Interest Hikes
The dollar rally lost steam against its major*traded rivals following its early gains after FED policy meeting. However, during early trading it hit a 3-week high against the Yen, but then lost 0.3%. Why had the greenback failed to gain after Wednesday’s Fed meeting? Some analysts support that investors may be able to see the end of its rate hike cycle.
The Australian dollar dropped 0.3 % to $0.7556, as the Fed rate rise stressed how far should Australian central bank go.
The Sterling inched up to a five-day high thanks to strong UK data for retail sales, beyond all expectations.
The Euro moved higher, above 1.18$ against the US dollar ahead of ECB’s policy meeting on Thursday. Now, the focus is on its decision regarding the end date for its vast stimulus programme.
Oil prices dipped ahead of the weekly EIA inventory report. Early on Wednesday, President Trump tweeted:
Oil prices are too high, OPEC is at it again. Not good!
— Donald J. Trump (@realDonaldTrump) June 13, 2018
Sources: Reuters, Euronews, bbc.com
PLEASE NOTE The information above is not investment advice.