Markets slump after Fed hikes rates

U.S. President Donald Trump looks on as his nominee for the chairman of the Federal Reserve Jerome Powell speaks during a press event in the Rose Garden at the White House

US Federal Reserve Raises Interest Rates Against Trump's Wishes

Advisers to the president tell Bloomberg that they are not convinced that Trump would actually move forward and attempt to fire Powell, however, and they are hoping that the holiday break gives him some time to cool off.

Observing that neither the pace nor the ultimate destination of any further rate increases is predetermined, Powell said the Fed will adjust monetary policy as best it can to keep the expansion on track, the labour market strong and inflation near two per cent.

The Federal Open Markets Committee (FOMC) of the US Federal Reserve at its meeting on Wednesday made a decision to raise the target range for the federal funds rate to 2.25 per cent to 2.50 per cent, in view of the realised and expected labor market conditions and inflation. Given that @realDonaldTrump has been silent on the matter, we can not rule out a rage stroke felling the leader of the free world, and before he got a chance to read the good news.

It was a remarkable comment coming just two days after the Fed raised the key borrowing rate on Wednesday and signalled it will continue to hike next year, albeit at a slower pace, with only two increases projected. "I think the Fed has gone insane", the president said in October.

Meeting for the last time this year, U.S. central bank policymakers increased the key interest rate for a fourth time in 2018.

The Fed now projects only two interest rate increases, down from three previously, as it trimmed its forecast for USA growth and inflation.

"He thinks his legacy is going to be the guy who rebuilt and revived the USA economy".

Rather, the central bank will need to base its decisions on the most up-to-date economic figures on jobs, inflation and economic growth.

Third Canadian detained in China
Dahlin, who was himself detained and repeatedly interrogated in China for his work with a human rights organization. Three underlines how ruthless China can be", he said.

The additional news conferences raise the likelihood that every Fed meeting could be the occasion for adjusting Fed policy in ways that might upset the markets.

For several years after the 2008 global financial crisis, the United States economy was stuck in a new normal of low growth, soaring asset markets, and dampened financial volatility. On the other hand, managed well, the news conferences could provide a valuable tool for Powell to shape how investors interpret the Fed's policies. The unemployment rate, now at a 49-year low of 3.7 per cent, is expected to fall to 3.5 per cent next year and rise slightly in 2020 and 2021. She thinks the USA economy will grow in a range of 1.5% to 1.8% next year, and it will probably enter a recession in 2020. Consumers, the main driver of the economy, are spending freely. Its statement described the economy as strong.

Trump previously protested against potential rate hikes after the Federal Reserve was expected to raise them for a fourth time by the year's end.

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 per cent inflation objective.

BlueScope Steel and South32 shed 2.33 and 1.81 per cent respectively, while Fortescue Metals fell 0.36 per cent to $4.115. He added that the latest rate increase "was appropriate for what is a very healthy economy". While officials said risks to their outlook "are roughly balanced, " they flagged threats from a softening world economy.

Oil prices continued to drop Friday as new reports show demand for the commodity is dropping in high-growth economies such as India and China.

There are also fears that the brisk pace of USA growth this year reflected something of a sugar high, with the economy artificially pumped up by tax cuts and a boost in government spending. Major equity indexes have moved into correction territory and are mostly negative for the year. And as USA interest rates have risen, loan-sensitive sectors of the economy, from housing to autos, have begun to weaken.

In addition, the Fed has been gradually shrinking the vast portfolio of Treasury and mortgage bonds it built up after the 2008 financial crisis.

Latest News