Wednesday's announcement marked the Fed's sixth rate hike since late 2015 and the first move under Powell, who took the helm of the central bank in February.
In minutes of an April Federal Open Market Committee meeting released Wednesday, officials used the word June six times, signaling the possibility of a rate hike next month.
A continuation of monetary tightening in the United States would indicate that economic conditions there are deemed to be favorable. If the momentum of economic activity is judged as weak, the rate rise will be postponed.
An interest rate increase in the United States could amplify such procyclicality in intermediation if such an action brings about rapid and large-scale capital outflow from emerging market economies.
Real estate investors in the U.S. are turning their attention to the Asia Pacific region, with a strengthening U.S. dollar and upward pressure on interest rates presenting new currency hedging opportunities.
Wilkins said the bank is particularly focused on data that indicate how wages and potential output are progressing, as well as the effects of the rate hikes and the renegotiation of the North American Free Trade Agreement.
For this reason, the rates hikes and other factors such as the US-China trade wars triggered a stock sell-off in Wall Street where Dow Jones shed of 3% and Nasdaq lost 4.
In the money markets, rates on short-term instruments such as 1-month and 3-month rose reflecting market participants' expectations of the path of monetary policy changes after the end of QEP.
適切な利上げペースは、原油市場やカナダの住宅市場、世界の貿易政策の動向次第」としました。
The appropriate pace of rate increases will depend on how the outlook evolves, with a particular focus on developments in oil markets, the Canadian housing market, and global trade policy,” it states.
Subsequently, it weakened slightly due to speculation that Denmark would not adopt the euro and concern that the increase in interest rates by the ECB would hurt the region's economy.
As of today, there are only a few countries that are in the stage of full-scale interest rate hike like the United States, and they are looking for the best timing of moving towards“exit”.
FRB Shelving Interest Rate Hikes in 2016 to Support the Economy The U.S. economy will maintain 1.7% growth in 2016 and slightly more than 2% growth down the road as well.
Financial market developments after interest rates were raised in the United States and Europe were as follows. In the United States, long-term interest rates fell given abatement of concern about possible inflation, and stock prices remained generally firm.
According to the CME Group's FedWatch program traders of fed-funds futures market on Monday were pricing in a 7% probability of a rate increase in October, down from 14% Thursday before the weak jobs report.
In order to correct such distortions, the authorities should immediately shift their policies of restraint from direct administrative measures to indirect measures such as raising interest rates.
If it is confirmed that the inflation rate in September(to be announced in mid-October) is lower than it was in August, fears of a rate hike will recede further.
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