HONG KONG: Tokyo led a rout of Asian shares today, mirroring big losses on Wall Street after the Federal Reserve (Fed) defied unprecedented pressure from US President Donald Trump and raised interest rates, sparking fears the move could choke economic growth. The Nikkei plunged to a 15-month low as investors took fright over the pace of monetary tightening, with a slump triggered by the Dow’s fall to its lowest level of 2018 gathering pace. The Fed raised rates for the fourth time this year – as expected – but markets reacted badly after chairman Jerome Powell said the bank would not shift course on reducing its balance sheet. Investors had hoped for a less aggressive approach amid concern that global growth is slowing, while Powell played down the impact of recent market turmoil on the US economy. “They think the Fed has completely misjudged the situation and now it’s just a matter of ... trying to find an exit while you can,“ said Kyle Rodda, a … [Read more...] about Asian stocks slump after Fed raises interest rates
Feds raise rates today
Bank Indonesia Needs to Raise Rate to Stay Ahead of the Curve
Jakarta. Bank Indonesia, the country central bank, needs to raise its benchmark interest rate on Thursday (25/09) or risks to be left behind the curve and sees a further weakening of the rupiah, economists said. "Bank Indonesia must be ahead of the curve amid the trend of rising global interest rates," said Cyrillus Harinowo, a former central banker and now a commissioner at Bank Central Asia, Indonesia's third-largest lender by market capitalization. Bank Indonesia has increased its benchmark 7-day reverse repo rate by 125 basis points so far this year, while the Federal Reserve has raised its interest rates by 175 basis points. That narrowed the interest rate differential between Indonesia's interest-bearing assets and similar assets in the US, making the former more risky to hold for foreign investors. Cyrillus said Bank Indonesia has 12 times a year to raise the benchmark rate, compared to 4 times in the US, which should give it … [Read more...] about Bank Indonesia Needs to Raise Rate to Stay Ahead of the Curve
Fed Chair Powell: further rate hikes best way to protect recovery
Business The Federal Reserve's steady interest rate hikes are the best way to protect the U.S. economic recovery and keep job growth as strong as possible and inflation under control, Fed Chair Jerome Powell said on Friday in a high-profile endorsement of the central bank's current approach to policy. 24 Aug 2018 10:06PM Bookmark JACKSON HOLE, Wyo.: The Federal Reserve's steady interest rate hikes are the best way to protect the U.S. economic recovery and keep job growth as strong as possible and inflation under control, Fed Chair Jerome Powell said on Friday in a high-profile endorsement of the central bank's current approach to policy.Speaking just days after President Donald Trump criticized the U.S. central bank's rate hikes, Powell used an annual research symposium here to "explain today why my colleagues and I believe that this gradual process...remains appropriate.""The economy is strong. Inflation is near our 2 percent objective, and most people who want a job are … [Read more...] about Fed Chair Powell: further rate hikes best way to protect recovery
Diverging fortunes in U.S. and Europe signal widening interest-rate gap
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By David Harrison in Washington Tom Fairless in Frankfurt The Wall Street Journal Tues., June 12, 2018 Central banks in the U.S. and Europe are both expected to move this week to unwind stimulus policies adopted since the global financial crisis a decade ago. But the likely steps mask a recent divergence in the fortunes of the world’s top two economic blocs, which looks set to keep the central banks on different interest-rate tracks for many months to come. The Federal Reserve is likely to raise short-term U.S. interest rates Wednesday and pencil in more increases in coming years, to keep the U.S. economy from over-heating, The ECB could signal on Thursday it won’t start raising rates for some time even as it moves to phase out its €2.5 trillion ($2.95 trillion) bond-buying program. ECB officials are pondering the causes of a recent slowdown in eurozone growth that appears to have continued through the spring, as well as the risks posed by … [Read more...] about Diverging fortunes in U.S. and Europe signal widening interest-rate gap
US Fed decision awaited for clues on interest rate path
After raising the benchmark lending rate in March, the Fed was on track for two more increases, but with prices and wages finally showing signs of rising, markets have become jittery about the prospects of a fourth increase this year. Futures markets on Tuesday afternoon gave about a 50 percent chance the Fed would raise rates in June, September and December. And the chances also have increased for the Fed to make four increases in 2019, rather than the three previously expected. "The big question is what happens next year and from what I can tell, the market's only pricing in maybe one more rate hike for next year," said Kathy Bostjancic of Oxford Economics. Recent economic statistics offer increasing reason to believe policymakers may feel compelled to move less gradually. The Fed's preferred inflation gauge, the personal consumption expenditures (PCE) price index, hit the central bank's two percent annual target last month for the first time in a year. And a monthly survey of the … [Read more...] about US Fed decision awaited for clues on interest rate path