US Federal Reserve Raises Interest Rates Despite Lower Inflation
- Author: Leroy Wright Jun 18, 2017,
Jun 18, 2017, 17:58
While the hike was widely expected, some investors said the central bank's tone was more hawkish and that raised concern about the pace of USA economic growth.
A retreat in inflation over the past two months has caused jitters that the shortfall, if sustained, could alter the pace of future rate hikes.
Germany's DAX fell 0.9 percent to 12,690 while the CAC40 of France sank 1.1 percent to 5,188.
MSCI's broadest index of Asia-Pacific shares outside Japan dropped 0.7 percent, led by resource shares. The S&P 500 technology index ended down 0.5 percent, but well off its lows for the day. Greece also hopes to get a broad deal on debt relief at a meeting Thursday of finance ministers from the 19-country eurozone.
An agreement on debt relief is a pre-requisite for the International Monetary Fund to participate in a deal for Greece, which in turn would pave the way for the European Central Bank to involve Greek government debt in its asset purchase scheme.
RATE HIKE: The Federal Reserve raised interest rates for the third time since December, something investors had widely expected based on the Fed's recent statements. While inflation has moderated in recent months, the Fed seems to be attributing this mostly to one-off factors. "Expect US treasury (UST) yields and the dollar to fall on the news, although US equities are likely to be buoyed by the more dovish outlook".
At Bank for Investment and Development of Viet Nam (BIDV), exchange rates saw no change compared with Wednesday, being listed at VND22,665 for buying rate and VND22,735 for selling rate. For the first three months of the year, consumer prices increased by more than 2% on a year-over-year basis. The Fed is confident the United States economy will pick up again, but will clearly need to watch the data carefully.
Brent crude settled down 8 cents at $46.92 a barrel, while USA crude settled down 27 cents at $44.46, after touching a six-month low of $44.32 a barrel. It fell $1.73, or 3.7 percent, to settle at $44.73 a barrel in NY. Brent crude, used to price global oils, fell 16 cents to $46.84 a barrel. The dollar.DXY was largely flat against a basket of currencies after reversing earlier losses, while the price of gold fell. The euro dropped to $1.1160 from $1.1217.