Wall St slips as Fed meets to decide on interest rates

Gold will rise after the Federal Reserve pledged to stick to its gradual pace of tightening as negative real interest rates deepen and weigh on the dollar, according to Wayne Gordon, executive director for commodities and forex at UBS Group AG's wealth management unit.

The rate hikes, he said, can be viewed as positive signs that the economy continues to be strong and not headed into a recession. Leading into Wednesday's decision, investors were predicting the odds of a rate increase at 95 percent.

Latest data also showed a jump in inflation in the world's largest economy, with the rate of price growth almost doubling in the twelve months to end January this year.

Lucy O'Carroll, chief economist at Aberdeen Asset Management, told Sky News it would have been an "enormous surprise" if the Fed had not raised rates.

Wu said that the Fed's latest rate hike had been widely anticipated by the global financial markets, so the move is unlikely to have much impact on the movement of the Taiwan dollar, meaning that there is no need for the central bank to tweak its monetary policy at the moment.

After going a year without touching rates, this is the second hike in three months.

One expert cautions that rising interest rates could scare some into thinking it will negatively affect the housing market, however he insists this is not the case. Little more than a month ago there was significant doubt among market analysts about whether another interest rate increase would be announced at Wednesday's meeting, following on from a rise in December.

Speaking to reporters following the announcement, Federal Reserve Chair Janet Yellen was careful to keep her comments neutral in relation to President Trump's proposed fiscal policies.

That might not be a deal breaker for many buyers, but it could hurt those shopping in more expensive neighborhoods, or those right on the margin of being able to afford a home.

"The FOMC expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate", the US Fed said in a statement.

The central bank hiked its key short-term rate by a quarter-point to a range of 0.75 to one per cent, in a move prompted by solid signs of a strengthening US economy. After December's meeting, Fed officials hinted at its December meeting that three rate increases were coming in the near future. We have watched rates go up over the last few months, and now buyers actually feel the pressure to pull the trigger sooner rather than later.

A rise in oil prices, after a surprise fall in USA crude inventories, also boosted energy stocks.

"So, if you have 20 years left on, say, a $400,000 adjustable rate mortgage?".

  • Zachary Reyes