Asian shares fall after Fed rate hike, tracking Wall St lead

Federal Reserve Raises Key Interest Rate

But she attributed the recent trend to one-off factors, including lower prescription drug prices and cellphone services. We expect at least one more rate hike this year but incoming data will influence future decisions.

The Fed's benchmark short-term rate, which influences consumer and business lending, will now rise to between 1% and 1.25%. Echoing that view was the SEP, which lowered near-term inflation projections, but left the forecasts for the coming years unchanged. The rest of them said it would make such a move at its December 12-13 meeting.

The overriding message from the Fed was that in the midst of low economic growth, falling consumption spending and the spread of part-time and casual work replacing full time jobs, the present situation represents the new normal.

Jobs gain moderated but solid on an average.

The US Federal Reserve Board yesterday increased its base rate by 0.25 percentage points to a range of 1 percent to 1.25 percent, despite further falls in retail sales and data showing that inflation remains below the Fed's target rate of 2 percent. The forecast for 2018 remained the same, at 2.1%. The 28-year-old chartered accountant said he has been saving to buy a home in Ottawa for more than two years, and will have to weigh some tough choices if borrowing becomes more costly.

"I really don't have anything for you at this point", she said in response to a reporter's question.

"A lot of people have the mindset. that they have to wait until maturity" before redeeming CDs, Huston said.

The betting is that the administration will choose officials who will tilt the Fed toward a more "hawkish" stance.

We say this because the Fed held interest rates steady at an unprecedented low rate of 0% for almost eight years. "We expect another rate hike and some balance sheet normalisation before the end of the year".


They forecast US economic growth of 2.2% in 2017, an increase from the previous projection in March. An eventual increase to the 2% target could occur in the medium term. If inflation doesn't pick up, he said, the Fed will find that raising rates and reducing its balance sheet is "going to be a hard maneuver". It swelled in the years after the financial crisis and has stayed big ever since.

The Fed said the initial cap for Treasuries would be set at $6 billion per month initially and increase by $6 billion increments every three months over a 12-month period until it reached $30 billion per month in reductions to its holdings.

But this isn't how the Fed sees it.

Yellen said the plan would lead to "a gradual and largely predictable decline" in the assets.

"The second half of this year will be all about kicking off changes to the balance sheet reinvestment programme, which in itself could have a small tightening effect for the overall economy".

"They brought in two emergency rate cuts totaling 50 basis points in 2015 to deal with an energy price shock".

If inflation data continues to disappoint, bond markets will be proven right, damaging the credibility of the Fed and, quite possibly, triggering a nasty sell-off in equity markets which are priced for much stronger growth. Chris Rupkey, chief financial economist at Mitsubishi UFG Union Bank in NY, said it was unclear what this reduction in liquidity would mean for interest rates. The US central bank started with QE back in 2007 in the wake of financial crisis and to avoid recession. "It's hard enough to get a mortgage as it is".

Yellen reiterated her intention to serve out the term.

Minneapolis Fed President Neel Kashkari dissented in Wednesday's decision. Secondly, in the past interest rate cycles, it is seen that the flows to emerging markets only get affected in the initial phase of the United States rate hike cycle (first couple of rate hikes) only.

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