United States Fed chair Jerome Powell on Wednesday said that lending rate hikes may continue in the future but at a slower pace.&nbsp;

Powell made this statement while speaking at a Congressional hearing on financial services.

"Given how far we've come, it may make sense to move rates higher but to do so at a more moderate pace," Reuters quoted him as saying.&nbsp;

His comment comes a week after the US Fed voted to hold interest rates steady after 10 consecutive hikes since March 2022. The US central bank has raised its lending rate by five percentage points since last year.&nbsp;

In absolute terms, the lending rate has risen from close to zero to a range between 5.0 and 5.25 percent.

Powell called the Fed's decision to not raise the interest rates on June 14 as an "exercise in prudence". He added that the latest rate pause allows the Fed time to gather more information before deciding on further rate hike towards the end of the year.

Inflation remains a big issue

Despite the pause in the lending rate hike, Powell told the Congress that the Fed's fight against inflation has a "long way to go".&nbsp;Inflation continues to be well above the Fed's 2 percent&nbsp;target.

"Inflation has moderated somewhat since the middle of last year. Nonetheless, inflation pressures continue to run high," he told the House committee, as per a Reuters report.&nbsp;

As per reports, the US Fed's median inflation estimates have fallen to 3.2 percent, while core inflation, which excludes volatile food and energy prices, is expected to rise to 3.9 percent this year.

'US dollar remains safe'

The US Fed chief also waded into the ongoing debate on de-dollarisation - a term signifying countries switching to a currency other than the US dollar. He said that the US dollar will continue to be world's reserve currency.&nbsp;

"The status of the United States of the dollar as the world's reserve currency is a very important thing to us. I think the reason we have that status is largely due to our great democratic institutions, the rule of law, and the fact that we we have, generally speaking, had had strong levels of price stability," Reuters quoted him as saying.

&nbsp;

(With inputs from agencies)&nbsp;

United States Fed chair Jerome Powell on Wednesday said that lending rate hikes may continue in the future but at a slower pace. Powell made this statement while speaking at a Congressional hearing on financial services.

United States Fed chair Jerome Powell on Wednesday said that lending rate hikes may continue in the future but at a slower pace. Powell made this statement while speaking at a Congressional hearing on financial services. "Given how far we've come, it may make sense to move rates higher but to do so at a more moderate pace," Reuters quoted him as saying. His comment comes a week after the US Fed voted to hold interest rates steady after 10 consecutive hikes since March 2022. The US central bank has raised its lending rate by five percentage points since last year. In absolute terms, the lending rate has risen from close to zero to a range between 5.0 and 5.25 percent. Powell called the Fed's decision to not raise the interest rates on June 14 as an "exercise in prudence". He added that the latest rate pause allows the Fed time to gather more information before deciding on further rate hike towards the end of the year. Inflation remains a big issue Despite the pause in the lending rate hike, Powell told the Congress that the Fed's fight against inflation has a "long way to go". Inflation continues to be well above the Fed's 2 percent target. "Inflation has moderated somewhat since the middle of last year. Nonetheless, inflation pressures continue to run high," he told the House committee, as per a Reuters report. As per reports, the US Fed's median inflation estimates have fallen to 3.2 percent, while core inflation, which excludes volatile food and energy prices, is expected to rise to 3.9 percent this year. 'US dollar remains safe' The US Fed chief also waded into the ongoing debate on de-dollarisation - a term signifying countries switching to a currency other than the US dollar. He said that the US dollar will continue to be world's reserve currency. "The status of the United States of the dollar as the world's reserve currency is a very important thing to us. I think the reason we have that status is largely due to our great democratic institutions, the rule of law, and the fact that we we have, generally speaking, had had strong levels of price stability," Reuters quoted him as saying. (With inputs from agencies)

U.S. Fed chief Jerome Powell hints at future rate hikes

The US Federal Reserve paused its interest-rate hiking spree on Wednesday, avoiding what would have been an 11th consecutive increase. &nbsp;According to CNBC, the Fed was analysing the impact of the previous 10 increases on the economy, while leaving the rates unchanged at 5-5.25 per cent. It also added that further interest rate hikes were likely later this year, as the Fed struggles to achieve its inflation target of 2 per cent.

“We have raised our policy interest rate by five percentage points, and we’ve continued to reduce our security holdings at a brisk pace. We’ve covered a lot of ground and the full effects of our tightening have yet to be felt,” Fed Chair Jerome Powell said at a press conference on Wednesday.

<h2>Is inflation under control in US?</h2>

The decision made by Federal Reserve's Federal Open Market Committee (FOMC) indicates a shift in its perspective on inflation. In June of last year, inflation reached a 40-year high of 9.1 per cent due to surging food and energy costs. However, inflation has since declined to 4 per cent in May, the lowest since April 2021.

In a statement, the FOMC explained that maintaining the target range for interest rates during this meeting would allow the committee to evaluate additional information and its implications for monetary policy. The committee will continue to assess the appropriate course of action while monitoring incoming data and its impact on the economic outlook.

<h2>Future interest rate hikes highly likely</h2>

Despite the decision to pause interest rate hikes, Fed officials have hinted that future increases may occur, depending on how close the economy gets to the 2 per cent inflation target. Higher interest rates result in increased borrowing costs, affecting mortgages, car payments, student loans, and other loans.

Watch:&nbsp;Is US economy really rich? Or is it a facade?

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Since March 2022, the Federal Reserve has raised interest rates 10 consecutive times, at a pace reminiscent of the 1980s. The increases have varied from 0.75 per cent during the summer and fall, when inflation was at its peak, to 0.25 per cent seen this spring. The current inflation rate stands at 5 per cent to 5.25 per cent, the highest since the 2008 financial crisis that preceded the 2008 global recession.

<h2>Fed continuously monitoring labour market</h2>

While the Federal Reserve has been using interest rates as a means to control inflation, it has also been closely monitoring the labour market for signs of economic cooling. In January, employers added 517,000 jobs, surpassing expectations and leading Fed officials to believe that interest rate increases could still occur without negatively impacting the job market.

<a href="https://www.wionews.com/business-economy/more-bad-news-for-the-us-economy-trade-deficit-widens-to-6-month-high-602028">Also read:&nbsp;More bad news for the US economy: Trade deficit widens to 6-month high</a>

Recent data from May indicates a robust job market, with the addition of 339,000 jobs. However, the unemployment rate has seen a slight increase from 3.4 per cent in April to 3.7 per cent in May.

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The US Federal Reserve paused its interest-rate hiking spree on Wednesday, avoiding what would have been an 11th consecutive increase. According to CNBC, the Fed was analysing the impact of the previous 10 increases on the economy, while leaving the rates unchanged at 5-5.

The US Federal Reserve paused its interest-rate hiking spree on Wednesday, avoiding what would have been an 11th consecutive increase. According to CNBC, the Fed was analysing the impact of the previous 10 increases on the economy, while leaving the rates unchanged at 5-5.25 per cent. It also added that further interest rate hikes were likely later this year, as the Fed struggles to achieve its inflation target of 2 per cent. “We have raised our policy interest rate by five percentage points, and we’ve continued to reduce our security holdings at a brisk pace. We’ve covered a lot of ground and the full effects of our tightening have yet to be felt,” Fed Chair Jerome Powell said at a press conference on Wednesday. Is inflation under control in US? The decision made by Federal Reserve's Federal Open Market Committee (FOMC) indicates a shift in its perspective on inflation. In June of last year, inflation reached a 40-year high of 9.1 per cent due to surging food and energy costs. However, inflation has since declined to 4 per cent in May, the lowest since April 2021. In a statement, the FOMC explained that maintaining the target range for interest rates during this meeting would allow the committee to evaluate additional information and its implications for monetary policy. The committee will continue to assess the appropriate course of action while monitoring incoming data and its impact on the economic outlook. Future interest rate hikes highly likely Despite the decision to pause interest rate hikes, Fed officials have hinted that future increases may occur, depending on how close the economy gets to the 2 per cent inflation target. Higher interest rates result in increased borrowing costs, affecting mortgages, car payments, student loans, and other loans. Watch: Is US economy really rich? Or is it a facade? × Since March 2022, the Federal Reserve has raised interest rates 10 consecutive times, at a pace reminiscent of the 1980s. The increases have varied from 0.75 per cent during the summer and fall, when inflation was at its peak, to 0.25 per cent seen this spring. The current inflation rate stands at 5 per cent to 5.25 per cent, the highest since the 2008 financial crisis that preceded the 2008 global recession. Fed continuously monitoring labour market While the Federal Reserve has been using interest rates as a means to control inflation, it has also been closely monitoring the labour market for signs of economic cooling. In January, employers added 517,000 jobs, surpassing expectations and leading Fed officials to believe that interest rate increases could still occur without negatively impacting the job market. Also read: More bad news for the US economy: Trade deficit widens to 6-month high Recent data from May indicates a robust job market, with the addition of 339,000 jobs. However, the unemployment rate has seen a slight increase from 3.4 per cent in April to 3.7 per cent in May. WATCH WION LIVE HERE ×

US Federal Reserve halts interest rate hike-spree after 10 increases in a row

The Federal Reserve has warned that the recent banking turmoil in the U.S. could trigger a credit crunch, posing a risk to the economy.

According to the Fed's Senior Loan Officer Opinion Survey, banks are anticipating stricter lending standards for the remaining part of 2023 due to worries about a recession and deposit outflows triggered by Silicon Valley Bank's failure. The major banks, with assets worth $250 billion or more, are attributing&nbsp;the possible credit restriction to an ambiguous economic situation.

Although regulators and officials have taken decisive actions to tackle the crises, worries about the economic outlook, credit quality, and funding liquidity could cause banks and other financial institutions to reduce the supply of credit to the economy. Consequently, there could be a sharp contraction in credit availability that would increase the cost of funding for businesses and households, ultimately resulting in a slowdown of economic activity.

The Federal Reserve has identified credit crunch as one of the most significant current risks to the financial system, despite not being the most likely scenario. Financial Times reports that this reflects mounting concerns about the potential impact of recent banking turmoil on the economy, making it one of the most turbulent times in the US&nbsp;since the global financial crisis of 2008.

Austan Goolsbee, President of the Federal Reserve Bank of Chicago, has warned that a credit squeeze could lead to a recession. This warning comes as the U.S. faces a possible debt default, as the White House and Congress are&nbsp;yet to agree on raising the borrowing limit of $31.4 trillion. To avoid a catastrophic impact on the economy and markets, a deal must be reached by early June.&nbsp;

The Federal Reserve has warned about potential vulnerabilities in the commercial real estate market, indicating that a decline in property prices could result in losses for creditors holding commercial real estate debt. To mitigate these risks, Financial Times reports that the central bank will increase its monitoring of commercial real estate loans and implement more rigorous examination procedures for banks with high levels of exposure to this sector.

Banks resilient in the face of interest rate hike

While the Fed's&nbsp;report highlights&nbsp;potential risks to the financial system from the credit crunch and the commercial real estate sector, it also brought some good news.

The Fed report indicates&nbsp;that the household sector might be less vulnerable to economic shocks, thanks to moderate borrowing levels and the majority of household debt owed by those with higher credit scores. Additionally, the Fed has expressed confidence that most banks could cope with tighter monetary policy.

Despite the turbulence experienced by banks in March, the central bank's&nbsp;report suggests that most banks have a solid financial foundation to withstand potential challenges resulting from higher interest rates.

The report indicates that most banks have high capital levels and moderate exposure to interest rate risk. Moreover, as of the fourth quarter of 2022, banks in the US, particularly those considered globally systemically important, were found to be well capitalized, which positions them to navigate any uncertainties in the near future.

The Federal Reserve has warned that the recent banking turmoil in the U.S. could trigger a credit crunch, posing a risk to the economy. According to the Fed's Senior Loan Officer Opinion Survey, banks are anticipating stricter lending standards for the remaining part of 2023 due to worries about a recession and deposit outflows triggered by Silicon Valley Bank's failure.

The Federal Reserve has warned that the recent banking turmoil in the U.S. could trigger a credit crunch, posing a risk to the economy. According to the Fed's Senior Loan Officer Opinion Survey, banks are anticipating stricter lending standards for the remaining part of 2023 due to worries about a recession and deposit outflows triggered by Silicon Valley Bank's failure. The major banks, with assets worth $250 billion or more, are attributing the possible credit restriction to an ambiguous economic situation. Although regulators and officials have taken decisive actions to tackle the crises, worries about the economic outlook, credit quality, and funding liquidity could cause banks and other financial institutions to reduce the supply of credit to the economy. Consequently, there could be a sharp contraction in credit availability that would increase the cost of funding for businesses and households, ultimately resulting in a slowdown of economic activity. The Federal Reserve has identified credit crunch as one of the most significant current risks to the financial system, despite not being the most likely scenario. Financial Times reports that this reflects mounting concerns about the potential impact of recent banking turmoil on the economy, making it one of the most turbulent times in the US since the global financial crisis of 2008. Austan Goolsbee, President of the Federal Reserve Bank of Chicago, has warned that a credit squeeze could lead to a recession. This warning comes as the U.S. faces a possible debt default, as the White House and Congress are yet to agree on raising the borrowing limit of $31.4 trillion. To avoid a catastrophic impact on the economy and markets, a deal must be reached by early June. The Federal Reserve has warned about potential vulnerabilities in the commercial real estate market, indicating that a decline in property prices could result in losses for creditors holding commercial real estate debt. To mitigate these risks, Financial Times reports that the central bank will increase its monitoring of commercial real estate loans and implement more rigorous examination procedures for banks with high levels of exposure to this sector. Banks resilient in the face of interest rate hike While the Fed's report highlights potential risks to the financial system from the credit crunch and the commercial real estate sector, it also brought some good news. The Fed report indicates that the household sector might be less vulnerable to economic shocks, thanks to moderate borrowing levels and the majority of household debt owed by those with higher credit scores. Additionally, the Fed has expressed confidence that most banks could cope with tighter monetary policy. Despite the turbulence experienced by banks in March, the central bank's report suggests that most banks have a solid financial foundation to withstand potential challenges resulting from higher interest rates. The report indicates that most banks have high capital levels and moderate exposure to interest rate risk. Moreover, as of the fourth quarter of 2022, banks in the US, particularly those considered globally systemically important, were found to be well capitalized, which positions them to navigate any uncertainties in the near future.

Banks brace for impact: US Fed reveals potential strains from higher interest rates

Inflation in the U.S eased slightly in April but still remained elevated, media reports said on Wednesday.

Moderating price pressures is good news for the US as that gives the Federal Reserve room to pause.

The consumer price index (CPI) rose by a below-forecast 4.9 percent from a year earlier, the first sub-5 percent reading in two years. Notably, economists had forecast the rate to be 5 percent.

The annual CPI peaked at 9.1 percent last June, posting its biggest increase since November 1981, and is subsiding as last year’s initial surge in energy prices following Russia’s invasion of Ukraine drops out of the calculation.

But the reactions to the latest US inflation report were mixed.&nbsp;

For some analysts, the inflation report does not give a clear signal on Federal Reserve's rate path.

“Today’s consumer inflation report supports the case for the Fed to seriously contemplate a pause in rate hikes in June, but does not support any near-term rate cuts,” said Scott Anderson, chief economist at Bank of the West in San Francisco.

Inflation has definitely moderated from overheated rates last year. But it still remains elevated and above the Federal Reserve's target of 2 percent.

“On balance, inflation is still too high and it is not going to fall back to 2% if it increases 0.4% a month,” Chris Low, chief economist at FHN Financial in New York, told Reuters.&nbsp;

The Federal Reserve's dichotomy is whether to look at inflation and hike rates or focus on the banking crisis.&nbsp;The aggressive rate hikes over the past year have hurt the banking industry heavily. But the central bank had no choice but to list rates because of soaring inflation.

Now, the domino effect of banks collapsing is keeping the US central bank on its toes.

(With agency inputs)&nbsp;

Inflation in the U.S eased slightly in April but still remained elevated, media reports said on Wednesday. Moderating price pressures is good news for the US as that gives the Federal Reserve room to pause.

Inflation in the U.S eased slightly in April but still remained elevated, media reports said on Wednesday. Moderating price pressures is good news for the US as that gives the Federal Reserve room to pause. The consumer price index (CPI) rose by a below-forecast 4.9 percent from a year earlier, the first sub-5 percent reading in two years. Notably, economists had forecast the rate to be 5 percent. The annual CPI peaked at 9.1 percent last June, posting its biggest increase since November 1981, and is subsiding as last year’s initial surge in energy prices following Russia’s invasion of Ukraine drops out of the calculation. But the reactions to the latest US inflation report were mixed. For some analysts, the inflation report does not give a clear signal on Federal Reserve's rate path. “Today’s consumer inflation report supports the case for the Fed to seriously contemplate a pause in rate hikes in June, but does not support any near-term rate cuts,” said Scott Anderson, chief economist at Bank of the West in San Francisco. Inflation has definitely moderated from overheated rates last year. But it still remains elevated and above the Federal Reserve's target of 2 percent. “On balance, inflation is still too high and it is not going to fall back to 2% if it increases 0.4% a month,” Chris Low, chief economist at FHN Financial in New York, told Reuters. The Federal Reserve's dichotomy is whether to look at inflation and hike rates or focus on the banking crisis. The aggressive rate hikes over the past year have hurt the banking industry heavily. But the central bank had no choice but to list rates because of soaring inflation. Now, the domino effect of banks collapsing is keeping the US central bank on its toes. (With agency inputs)

US inflation eases in April: Markets see only tiny possibility of June rate hike

A recent survey by the Federal Reserve shows the US economy is in bad shape. The Fed survey points to difficulties in getting loans as banks are tightening their lending standards.

US faces credit crunch amid bank turmoil

The US Federal Reserve raised its interest rates by a quarter of a percentage point for a 10th&nbsp;consecutive time on Wednesday (May 3), while indicating a pause in further increases. This comes amid recent bank failures as well as Congress’ ongoing deadlock over the debt ceiling issue.&nbsp;

The central bank has been aggressively raising interest rates since March last year in a bid to control the US’ soaring inflation and pushed its benchmark overnight interest rate somewhere in the 5.00 per cent and 5.25 per cent range. In the statement, the Fed also said that it would “take into account” the impact of tighter monetary policy and “economic and financial developments” going forward.

During the press conference, Fed Chair Jerome Powell said that the central bank still views inflation as too high and that it remains concerned by high price pressures. However, it no longer “anticipates” further hikes and monitors the incoming data to make the decision if more hikes “may be appropriate.”

Therefore, Powell has said that it is too soon to say if the rate-hike cycle is over as the decisions made by officials are taking on a “meeting-by-meeting” basis, adding, “we are prepared to do more&nbsp;with rate rises if needed.”&nbsp;

The decision about the recent hike came after the policy-setting Federal Open Market Committee’s (FOMC) recent meeting and was in line with the expectations of analysts and traders.&nbsp;

Notably, the recent statement by the central bank marks a departure from the last rate announcement where policymakers had said that they expect “additional policy firming” to rein in inflation. This time around, the Fed’s ease of guidance suggests that the economy is somewhat beginning to cool.&nbsp;

“If you add up all the tightening that's going on through various channels, we feel like we're getting close or are maybe even there,” said Powell, as quoted by Reuters, about monetary policy. The Fed chair also pushed back on market expectations of rate cuts this year adding, “We on the committee have a view that inflation is going to come down not so quickly, it will take some time.”&nbsp;

It is worth noting that the Fed’s policy rate, this time around, is somewhat close to where it was on the eve of the 2008 financial crisis. The rate hikes have more than doubled mortgage rates, elevated the costs of auto loans, credit card borrowing and business loans and heightened the risk of a recession, reported The Associated Press.&nbsp;

(With inputs from agencies)&nbsp; 
 
 
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The US Federal Reserve raised its interest rates by a quarter of a percentage point for a 10th consecutive time on Wednesday (May 3), while indicating a pause in further increases.

The US Federal Reserve raised its interest rates by a quarter of a percentage point for a 10th consecutive time on Wednesday (May 3), while indicating a pause in further increases. This comes amid recent bank failures as well as Congress’ ongoing deadlock over the debt ceiling issue. The central bank has been aggressively raising interest rates since March last year in a bid to control the US’ soaring inflation and pushed its benchmark overnight interest rate somewhere in the 5.00 per cent and 5.25 per cent range. In the statement, the Fed also said that it would “take into account” the impact of tighter monetary policy and “economic and financial developments” going forward. During the press conference, Fed Chair Jerome Powell said that the central bank still views inflation as too high and that it remains concerned by high price pressures. However, it no longer “anticipates” further hikes and monitors the incoming data to make the decision if more hikes “may be appropriate.” Therefore, Powell has said that it is too soon to say if the rate-hike cycle is over as the decisions made by officials are taking on a “meeting-by-meeting” basis, adding, “we are prepared to do more with rate rises if needed.” The decision about the recent hike came after the policy-setting Federal Open Market Committee’s (FOMC) recent meeting and was in line with the expectations of analysts and traders. Notably, the recent statement by the central bank marks a departure from the last rate announcement where policymakers had said that they expect “additional policy firming” to rein in inflation. This time around, the Fed’s ease of guidance suggests that the economy is somewhat beginning to cool. “If you add up all the tightening that's going on through various channels, we feel like we're getting close or are maybe even there,” said Powell, as quoted by Reuters, about monetary policy. The Fed chair also pushed back on market expectations of rate cuts this year adding, “We on the committee have a view that inflation is going to come down not so quickly, it will take some time.” It is worth noting that the Fed’s policy rate, this time around, is somewhat close to where it was on the eve of the 2008 financial crisis. The rate hikes have more than doubled mortgage rates, elevated the costs of auto loans, credit card borrowing and business loans and heightened the risk of a recession, reported The Associated Press. (With inputs from agencies) WATCH WION LIVE HERE You can now write for wionews.com and be a part of the community. Share your stories and opinions with us here.

US Federal Reserve announces quarter-point interest rate hike, signals potential pause

It's not inflation that the US Fed needs to worry about but also banks' contagion risks after the collapse of Silicon Valley Bank, Signature Bank, and Silvergate Capital due to illiquidity. WION tells you how Fed is walking tightrope between inflation and bank turmoil.

US Fed chair walk a tightrope this year?

Slaying elevated inflation and combating a financial crisis - that's the challenge keeping the US Federal Reserve and other central bankers on their toes. Both these issues are not new.

Slaying elevated inflation and combating a financial crisis - that's the challenge keeping the US Federal Reserve and other central bankers on their toes. Both these issues are not new. But what happens when they need to be addressed at the same time? Is there a playbook that central banks can turn to? Former Federal Reserve Chair Paul Volcker slayed inflation, and Ben Bernanke saved the banks, but can current Chief Jerome Powell do both? Well, that is the need of the hour. The current banking crisis threatens financial stability, while inflation threatens to push ahead. And that is not restricted to the confines of the US but risks spreading beyond its borders. At first glance, the Fed under Powell's leadership and other major central banks continued this week with the same policy they have had in place for the past year, which is to raise interest rates to bring down inflation. In reality, however, everything is different now that a series of bank failures has sent tremors through global financial markets. Threats to financial stability were not even on the radar of central bankers until recently. To hear Powell and his colleagues tell it, avoiding another round of inflation like the one experienced in the 1970s is still job one. But the signal is shifting that is warranting a policy similar to what Ben Bernanke used during and after the global financial crisis. Bernanke fought off the 2008 crisis by adopting unprecedented methods, including doling out free cash to banks. Turning for the worse? After Silicon Valley Bank failed and Credit Suisse was taken over by a shotgun marriage, the Fed only raised interest rates by half as much as was anticipated. The European Central Bank and the Swiss National Bank hiked as expected, but they refrained from providing any forward guidance. The recent wild swings in market bets on policy show that investors, too, are having a hard time figuring this out. After SVB's failure, they shifted from pricing in an aggressive Fed that hikes several more times to pricing in a "we're all doomed" scenario of imminent rate cuts. Analysts say the core dilemma for policymakers is that prescriptions for controlling prices and boosting banks point in opposite directions. ALSO READ | US Fed delivers 25 points rate hike amid global banking turmoil According to Ethan Harris, Head of Global Economics Research at Bank of America, "the market is acting as if we're in the midst of a pretty serious crisis." "It's putting a very high weight on an adverse scenario where you have a big financial event and a very bad economy," added BofA's Harris, who was the former head of research at Lehman Brothers before its collapse in 2008. WATCH | Silicon Valley Bank's bankruptcy faces challenges × To get inflation down, central banks jack up rates. They give money to struggling lenders and lower the cost of borrowing to avert crises. And the danger is that they end up with the worst of both worlds: a full-blown crisis that triggers a recession. Then central banks would be forced to abandon the fight against inflation before it was over. Anna Wong, Chief US economist at Bloomberg, drawing on a study of American banking crises over the last 140 years, said, "the tension between fighting inflation versus preserving financial stability is now more stark than any time in the Fed's history." The current crisis would have to take a significant turn for the worse," she says referring that tighter credit would take a decent-sized bite out of inflation. And if that doesn’t happen, "markets will have to revise up their estimates for the Fed’s policy path." So, what remains to be seen is, have the predictions now turned for the worse, or the better? A softer tone or an aggressive one will define the path the world's largest economy takes. WATCH WION LIVE HERE:

Analysis: Can the US Fed save banks and fight inflation at the same time?

Here we bring you a quick round-up of all latest news, top headlines and international breakings from all across the globe, stay tuned with Gravitas for more!

Gravitas Global Headlines: US Central Bank raises interest rates for 9th straight time

After India's budget, the market's focus shift to the US Federal Reserve's decision later today with mounting evidence of easing inflation. Watch this report to know more.

After India's budget, the markets focus shift to US Fed decision

The&nbsp;United States National Highway Traffic Safety Administration (NHTSA), on Monday, told reporters that the regulatory body is investigating Tesla CEO Elon Musk’s tweet in the context of at least 14 Teslas crashing into emergency vehicles while using its Autopilot driver assist system. The acting head of NHTSA, Ann Carlson, made the statement while&nbsp;addressing the press on the sidelines of an event in Washington.&nbsp;

According to reports, in June 2022, the NHTSA moved up to an engineering analysis amid its ongoing defect probe into at least 830,000 Tesla vehicles with the driver assistance system Autopilot feature in the context of crashes involving parked emergency vehicles. Additionally, for&nbsp;the past two years, the electric carmaker has been beta-testing its “Full Self-Driving” (FSD) with owners who have not been trained to use the system but are reportedly being actively monitored by the company.&nbsp;

The probe began in August 2021, and the NHTSA’s Carlson said they are “investing a lot of resources”, which includes a lot of “technical expertise, actually some legal novelty and so we're moving as quickly as we can, but we also want to be careful and make sure we have all the information we need.”&nbsp;&nbsp;

ALSO READ |&nbsp;<a href="https://www.wionews.com/business-economy/elon-musk-breaks-world-record-for-largest-ever-loss-of-personal-fortune-551123">Elon Musk breaks world record for largest-ever loss of personal fortune</a>

Meanwhile,&nbsp;a tweet from Tesla CEO indicated&nbsp;that Tesla might allow some owners testing the “Full Self-Driving” system to disable alerts which remind them to keep their hands on the steering wheel. Subsequently, the regulatory body said they have asked Tesla for additional information on Musk's tweet&nbsp;which is now a part of the broader ongoing investigation into the 14 vehicles.&nbsp;

The ongoing investigation is necessary before NHTSA can demand a recall and it also includes a review of whether Tesla vehicles ensure that the drivers are paying attention as they said previously that evidence suggests that the drivers had complied with the electric carmaker’s alert protocols. This has since raised questions about the effectiveness of the company’s alert strategy for its drivers.&nbsp;

ALSO WATCH |&nbsp;<a href="https://www.wionews.com/videos/world-business-watch-musk-tweet-about-disabling-driver-monitoring-in-tesla-being-probed-550901">World Business Watch: Musk tweet about disabling driver monitoring in Tesla being probed</a> 
 
Earlier this year, the electric carmaker also said at least 160,000 of its cars which amount to nearly 15 per cent of all Tesla which is currently on US roads are participating. While the company website says that their cars cannot drive themselves, the “Full Self-Driving” can more or less autonomously&nbsp;navigate roads in several instances. However, experts have raised concerns about the system’s errors, said a report by the Associated Press.&nbsp;

The tweet in question was an interaction between Twitter Chief Executive Elon Musk and a user on December 31 about Tesla’s FSD feature, said Carlson confirming that the agency was in discussion with Tesla about the same.

The tweet reportedly suggested that drivers who have used Tesla’s “Full Self-Driving” software system for more than 10,000 miles should be able to disable the “steering wheel nag,” an alert which asks drivers to hold the wheel and confirm that they are paying attention.&nbsp;

ALSO READ |&nbsp;<a href="https://www.wionews.com/technology/tesla-reports-two-new-crash-fatalities-in-model-3-cars-linked-to-advanced-driver-assistance-systems-534811">Tesla reports two more crash fatalities in Model 3 cars linked to advanced driver assistance system</a>

In response on the microblogging platform Musk wrote, “Agreed, update coming in Jan.” While there is no clarity on the kind of changes Tesla will make or even disable the “steering wheel nag”. Meanwhile,&nbsp;many have raised concerns about the dangers of disabling such an important feature.&nbsp;

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Agreed, update coming in Jan
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The recently rolled out&nbsp;$15,000 FSD software&nbsp;is said to be&nbsp;an add-on software which enables Tesla vehicles to change lanes and park and compliments its “Autopilot” feature. Notably, this is not the first time that Tesla has come under fire for the effectiveness of their safety protocols as the National Transportation Safety Board three years ago also criticised the electric carmaker’s “ineffective monitoring” after its Autopilot software’s involvement in a fatal crash in California, in 2018.&nbsp;&nbsp;

(With inputs from agencies)&nbsp; 
 
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The United States National Highway Traffic Safety Administration (NHTSA), on Monday, told reporters that the regulatory body is investigating Tesla CEO Elon Musk’s tweet in the context of at least 14 Teslas crashing into emergency vehicles while using its Autopilot driver assist system.

The United States National Highway Traffic Safety Administration (NHTSA), on Monday, told reporters that the regulatory body is investigating Tesla CEO Elon Musk’s tweet in the context of at least 14 Teslas crashing into emergency vehicles while using its Autopilot driver assist system. The acting head of NHTSA, Ann Carlson, made the statement while addressing the press on the sidelines of an event in Washington. According to reports, in June 2022, the NHTSA moved up to an engineering analysis amid its ongoing defect probe into at least 830,000 Tesla vehicles with the driver assistance system Autopilot feature in the context of crashes involving parked emergency vehicles. Additionally, for the past two years, the electric carmaker has been beta-testing its “Full Self-Driving” (FSD) with owners who have not been trained to use the system but are reportedly being actively monitored by the company. The probe began in August 2021, and the NHTSA’s Carlson said they are “investing a lot of resources”, which includes a lot of “technical expertise, actually some legal novelty and so we're moving as quickly as we can, but we also want to be careful and make sure we have all the information we need.” ALSO READ | Elon Musk breaks world record for largest-ever loss of personal fortune Meanwhile, a tweet from Tesla CEO indicated that Tesla might allow some owners testing the “Full Self-Driving” system to disable alerts which remind them to keep their hands on the steering wheel. Subsequently, the regulatory body said they have asked Tesla for additional information on Musk's tweet which is now a part of the broader ongoing investigation into the 14 vehicles. The ongoing investigation is necessary before NHTSA can demand a recall and it also includes a review of whether Tesla vehicles ensure that the drivers are paying attention as they said previously that evidence suggests that the drivers had complied with the electric carmaker’s alert protocols. This has since raised questions about the effectiveness of the company’s alert strategy for its drivers. ALSO WATCH | World Business Watch: Musk tweet about disabling driver monitoring in Tesla being probed Earlier this year, the electric carmaker also said at least 160,000 of its cars which amount to nearly 15 per cent of all Tesla which is currently on US roads are participating. While the company website says that their cars cannot drive themselves, the “Full Self-Driving” can more or less autonomously navigate roads in several instances. However, experts have raised concerns about the system’s errors, said a report by the Associated Press. The tweet in question was an interaction between Twitter Chief Executive Elon Musk and a user on December 31 about Tesla’s FSD feature, said Carlson confirming that the agency was in discussion with Tesla about the same. The tweet reportedly suggested that drivers who have used Tesla’s “Full Self-Driving” software system for more than 10,000 miles should be able to disable the “steering wheel nag,” an alert which asks drivers to hold the wheel and confirm that they are paying attention. ALSO READ | Tesla reports two more crash fatalities in Model 3 cars linked to advanced driver assistance system In response on the microblogging platform Musk wrote, “Agreed, update coming in Jan.” While there is no clarity on the kind of changes Tesla will make or even disable the “steering wheel nag”. Meanwhile, many have raised concerns about the dangers of disabling such an important feature. Agreed, update coming in Jan — Elon Musk (@elonmusk) December 31, 2022 × The recently rolled out $15,000 FSD software is said to be an add-on software which enables Tesla vehicles to change lanes and park and compliments its “Autopilot” feature. Notably, this is not the first time that Tesla has come under fire for the effectiveness of their safety protocols as the National Transportation Safety Board three years ago also criticised the electric carmaker’s “ineffective monitoring” after its Autopilot software’s involvement in a fatal crash in California, in 2018. (With inputs from agencies) WATCH WION LIVE HERE You can now write for wionews.com and be a part of the community. Share your stories and opinions with us here.

US Feds probe Tesla Autopilot crashes, Musk tweet about disabling monitoring alerts

The U.S. Federal Reserve reinforced its inflation fight Wednesday by raising its key interest rate for the seventh time this year and signalling more hikes to come.

World Business Watch: U.S. announces 7th interest rate hike of 2022

Asian shares wobbled in cautious trading on Wednesday while the dollar sagged slightly as investors braced for the US Federal Reserve's policy outcome later in the day today with many looking for any signs of a slowdown in future rate hikes.

WION Business News | Global markets brace for US Fed decision

US Federal Reserve has raised interest rates by three-quarters of a percentage point for the third consecutive time and forecast further aggressive increases to tame record-high inflation.

US Federal Reserve raises interest rates for third straight time, sees more increases ahead

Wall Street’s major indexes ended a choppy session on Monday as investors looked to this week’s policy meeting at the Federal Reserve and how aggressively it will raise prices.

World Business Watch: Wall Street ends choppy session higher with firm focus on Fed

Global markets tumbled after a hawkish assessment by US Federal Reserve chair Jerome Powell. The richest Americans lost nearly $78 billion after the 8-minute speech. Palki Sharma tells you why central banks alone cannot solve this crisis.

Gravitas: Markets tumble as US Fed hints at more rate hikes

Amid the ongoing Russian invasion of Ukraine, the world is battling high inflation. In the United States, Fed is eyeing more rate hikes as recession fears loom.

US Fed sees more rate hikes in the future amid high inflation and recession fears

The US Federal Reserve announced a 0.25 percent hike in its bench-mark short-term interest rate, launching a campaign to tackle the fastest inflation in four decades even as risks to economic growth mount.

US Fed lifts policy rate by 0.25%

Federal Reserve officials are coalescing around a plan to raise interest rates steadily starting in March and then move swiftly to shrink the central bank’s big bond holdings as policymakers look to cool the economy at a moment of rapid inflation.

Policymakers have spent the past week broadcasting that the interest rate increase they plan to make at their March meeting — one that investors already fully expect central bankers to make as they try to tame price increases — will be the first in a string of rate moves. Central bankers also appear to be converging on a plan to promptly start shrinking the Fed’s holdings of government-backed debt, which were vastly expanded during the pandemic downturn as the Fed snapped up bonds in a bid to keep markets functioning and cushion the economy.

The central bank bought $120 billion in Treasury and mortgage-backed securities for much of 2020 and 2021, but officials have been tapering those purchases and are on track to stop them entirely in March. By quickly pivoting to allow securities on its now nearly $9 trillion balance sheet to expire without reinvestment — reducing its holdings over time — the central bank would take away an important source of demand for government-backed debt and push rates on those securities higher. That would work together with a higher Fed policy interest rate to make many types of borrowing more expensive.

Higher borrowing costs should weigh on lending and spending, tempering demand and helping to slow price gains, which have been uncomfortably rapid. Fresh data out this week is expected to show further acceleration in the central bank’s preferred inflation gauge, which is already running at its fastest pace in 40 years.

Lael Brainard, a Fed governor who has been nominated by President Joe Biden to serve as vice chair, said last week that she believed a “series” of rate increases were warranted.

“I do anticipate that it will be appropriate, at our next meeting, which is in just a few weeks, to initiate a series of rate increases,” she said Friday at a forum held by the University of Chicago’s Booth School of Business in New York. Brainard said that the Fed would then turn to shrinking its balance sheet, a process that could be appropriate to start “in coming meetings.”

Michelle Bowman, another Fed governor, echoed that balance sheet reduction could start imminently, saying in a speech Monday that the Fed needs to begin to reduce the size of its bond holdings “in the coming months.”

The precise timing of balance sheet shrinking is a topic of debate. John Williams, president of the Federal Reserve Bank of New York, suggested Friday that the process could start “later this year,” which could suggest in coming months or slightly later. But officials have been uniformly clear that a pullback is coming — and likely more quickly than investors had expected until just recently.

Although Fed policymakers plan to shrink their holdings of Treasury bonds and mortgage-backed securities by allowing securities to expire without reinvesting them, rather than by actively selling the debt, the central bank’s latest meeting minutes suggested that officials could eventually move to outright sales of mortgage-tied securities. The minutes also suggested that officials thought “a significant reduction” in the size of the balance sheet would be warranted.

The central bank’s planned moves would be a rapid pace of change compared to the last time they increased interest rates, from 2015 to the end of 2018. Then, officials shrank the balance sheet only gradually and pushed up interest rates glacially, once per quarter at fastest.

Borrowing costs have already begun to rise as investors adjust to the Fed’s more rapid-fire plans. Markets expect six or seven quarter-point interest rate increases this year. The rate on a 30-year mortgage has climbed from about 2.9% last fall — when the Fed began its policy pivot — to 3.9% now.

The Fed’s policy changes “will bring inflation down over time, while sustaining a recovery that includes everyone,” Brainard said, adding that as the Fed signals that it will raise rates, “the market is clearly aligned with that.”

Yet with inflation rapid, wage growth strong and signs of taut labour market conditions plentiful, some Fed officials worry that the central bank needs to move even more quickly.

Bowman, for instance, said she was still open to a half-percentage point increase in March — something her colleague James Bullard, president of the Federal Reserve Bank of St. Louis, has also suggested.

“I will be watching the data closely to judge the appropriate size of an increase at the March meeting,” Bowman said.

But Bullard, who has repeatedly said he would prefer to see rates rise by a full percentage point of rate increases by July, has also noted that he would defer to the chair, Jerome Powell, on the size of the initial increase. And other members of the Fed’s policy-setting committee have suggested that they do not think starting with a half-point increase is necessary, suggesting that a smaller increase may be more likely.

“There’s really no kind of compelling argument that you have to be faster right in the beginning,” Williams, president of the powerful Federal Reserve Bank of New York, told reporters last week.

Federal Reserve officials are coalescing around a plan to raise interest rates steadily starting in March and then move swiftly to shrink the central bank’s big bond holdings as policymakers look to cool the economy at a moment of rapid inflation.

Federal Reserve officials are coalescing around a plan to raise interest rates steadily starting in March and then move swiftly to shrink the central bank’s big bond holdings as policymakers look to cool the economy at a moment of rapid inflation. Policymakers have spent the past week broadcasting that the interest rate increase they plan to make at their March meeting — one that investors already fully expect central bankers to make as they try to tame price increases — will be the first in a string of rate moves. Central bankers also appear to be converging on a plan to promptly start shrinking the Fed’s holdings of government-backed debt, which were vastly expanded during the pandemic downturn as the Fed snapped up bonds in a bid to keep markets functioning and cushion the economy. The central bank bought $120 billion in Treasury and mortgage-backed securities for much of 2020 and 2021, but officials have been tapering those purchases and are on track to stop them entirely in March. By quickly pivoting to allow securities on its now nearly $9 trillion balance sheet to expire without reinvestment — reducing its holdings over time — the central bank would take away an important source of demand for government-backed debt and push rates on those securities higher. That would work together with a higher Fed policy interest rate to make many types of borrowing more expensive. Higher borrowing costs should weigh on lending and spending, tempering demand and helping to slow price gains, which have been uncomfortably rapid. Fresh data out this week is expected to show further acceleration in the central bank’s preferred inflation gauge, which is already running at its fastest pace in 40 years. Lael Brainard, a Fed governor who has been nominated by President Joe Biden to serve as vice chair, said last week that she believed a “series” of rate increases were warranted. “I do anticipate that it will be appropriate, at our next meeting, which is in just a few weeks, to initiate a series of rate increases,” she said Friday at a forum held by the University of Chicago’s Booth School of Business in New York. Brainard said that the Fed would then turn to shrinking its balance sheet, a process that could be appropriate to start “in coming meetings.” Michelle Bowman, another Fed governor, echoed that balance sheet reduction could start imminently, saying in a speech Monday that the Fed needs to begin to reduce the size of its bond holdings “in the coming months.” The precise timing of balance sheet shrinking is a topic of debate. John Williams, president of the Federal Reserve Bank of New York, suggested Friday that the process could start “later this year,” which could suggest in coming months or slightly later. But officials have been uniformly clear that a pullback is coming — and likely more quickly than investors had expected until just recently. Although Fed policymakers plan to shrink their holdings of Treasury bonds and mortgage-backed securities by allowing securities to expire without reinvesting them, rather than by actively selling the debt, the central bank’s latest meeting minutes suggested that officials could eventually move to outright sales of mortgage-tied securities. The minutes also suggested that officials thought “a significant reduction” in the size of the balance sheet would be warranted. The central bank’s planned moves would be a rapid pace of change compared to the last time they increased interest rates, from 2015 to the end of 2018. Then, officials shrank the balance sheet only gradually and pushed up interest rates glacially, once per quarter at fastest. Borrowing costs have already begun to rise as investors adjust to the Fed’s more rapid-fire plans. Markets expect six or seven quarter-point interest rate increases this year. The rate on a 30-year mortgage has climbed from about 2.9% last fall — when the Fed began its policy pivot — to 3.9% now. The Fed’s policy changes “will bring inflation down over time, while sustaining a recovery that includes everyone,” Brainard said, adding that as the Fed signals that it will raise rates, “the market is clearly aligned with that.” Yet with inflation rapid, wage growth strong and signs of taut labour market conditions plentiful, some Fed officials worry that the central bank needs to move even more quickly. Bowman, for instance, said she was still open to a half-percentage point increase in March — something her colleague James Bullard, president of the Federal Reserve Bank of St. Louis, has also suggested. “I will be watching the data closely to judge the appropriate size of an increase at the March meeting,” Bowman said. But Bullard, who has repeatedly said he would prefer to see rates rise by a full percentage point of rate increases by July, has also noted that he would defer to the chair, Jerome Powell, on the size of the initial increase. And other members of the Fed’s policy-setting committee have suggested that they do not think starting with a half-point increase is necessary, suggesting that a smaller increase may be more likely. “There’s really no kind of compelling argument that you have to be faster right in the beginning,” Williams, president of the powerful Federal Reserve Bank of New York, told reporters last week.

US Fed officials firm up plans for a swift pullback of economic help

The US Federal Reserve will kick off its tightening cycle in March with a 0.25% interest rate rise, but a growing minority say it will opt for a more aggressive half-point move to tamp down inflation.

US Fed to raise rates 0.25% in March: Poll

Worries about the possibilities of a quicker rate hike from the US Fed Reserve have dragged the global markets down. Indian markets have witnessed marginal recovery after falling for six-straight days.

Anxiety over US Fed decision drags down markets

The Federal Reserve raised its inflation expectations and moved up the timeframe on when it will next hike interest rates.

US Fed leaves key interest rates unchanged

US Federal Reserve has held its key interest rates near zero and said it plans to continue supporting economic recovery. Fed is maintaining the policies until the economy heals further from the effects of COVID-19 pandemic.

World Business Watch: Powell waves inflation worries away as Fed holds rates near zero

The Federal funds rate remained unchanged at zero to a quarter percentage point, and will stay there until America's labor market has recovered

Fed vows to keep interest rates near zero

The US Federal Reserve held interest rates steady on Wednesday, while also downplaying recent weak economic growth, a signal it will remain on course for gradual rate hikes.

The wording of the Fed&#39;s policy statement strengthens the prospect of two more increases in the benchmarket lending rate this year, likely at the June and September meetings.

The Fed&#39;s policy-setting Federal Open Market Committee voted unanimously to keep the federal funds rate in a range of 0.75-1.0 percent, just as most analysts had expected.

The FOMC members discounted the tepid growth in the first quarter -- when GDP expanded by only 0.7 per cent, the slowest in three years -- as a one-time issue, while emphasizing the continued strong labour market and solid hiring.

&quot;The Committee views the slowing in growth during the first quarter as likely to be transitory and continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace,&quot; the statement read.

The central bank raised rates in March and December, given steady job creation and some signs of mounting price pressures -- and amid the wave of optimism in the early days of President Donald Trump&#39;s term, with his promises of tax cuts and big infrastructure spending.&nbsp;

High bar for inaction 
 
Many economists also discounted the weak first quarter as an anomaly frequently seen in the first three months of the year, and continue to see the need for two more rate moves.&nbsp;

Fed-watchers applauded the nuance of the central bank&#39;s statement in signaling the continued move away from zero interest rates during the financial crisis, a shift known as policy &quot;normalization.&quot;

Barclays economists said although the Fed did not take action, &quot;it did something just as important: in the face of weak data, it signaled that it would maintain its normalization path this year.&quot;&nbsp;

At the same time, the Fed showed no uncertainty about the economy &quot;or hesitation over the path of policy,&quot; Barclays added.

&nbsp;Given that tone, &quot;we believe the bar for inaction in June is high. To derail June, the economy would need to provide proof of fundamental weakness to the FOMC,&quot; the economists said.

Mickey Levy of Berenberg Capital Markets noted that central bankers are not as reactive to every swing in data as they had been in the past two years.

The Fed &quot;appears to be firmly on a policy normalization track and is not reacting to every piece of high-frequency economic data,&quot; Levy said.&nbsp;

&quot;It would take a dramatic slowdown in the economy to derail the Fed&#39;s normalization plans.&quot;

&#39;Solid&#39; job gains 
 
Since the last meeting in March, &quot;The labor market has continued to strengthen even as growth in economic activity slowed,&quot; the FOMC statement said, with &quot;solid&quot; job gains and another decline in the unemployment rate, which now sits at 4.5 per cent.

And while household spending has risen only modestly, &quot;the fundamentals underpinning the continued growth of consumption remained solid.&quot;

Meanwhile, 12-month inflation has held close to the Fed&#39;s two percent target, even while some price measures declined in March.

The Fed&#39;s beige book survey of the economy prepared in advance of this week&#39;s meeting noted reports across the country of firms that had to provide bonuses, and increase wages and benefits, while still struggling to fill openings, even for low-skilled work.

Ian Shepherdson, chief economist of Pantheon Macroeconomics, said the rate hikes will be needed to head off inflation as the job market continues to tighten.&nbsp;

The FOMC members &quot;have not changed their view that the economy can take a &#39;gradual&#39; increase in rates, which will be needed to prevent an overshoot of the inflation target as the labor market tightens,&quot; Sherpherdson said. 
 
(AFP) 
 
&nbsp;

The Fed has kept federal funds rate in a range of 0.75-1.0%, just as most analysts had expected

The US Federal Reserve held interest rates steady on Wednesday, while also downplaying recent weak economic growth, a signal it will remain on course for gradual rate hikes. The wording of the Fed's policy statement strengthens the prospect of two more increases in the benchmarket lending rate this year, likely at the June and September meetings. The Fed's policy-setting Federal Open Market Committee voted unanimously to keep the federal funds rate in a range of 0.75-1.0 percent, just as most analysts had expected. The FOMC members discounted the tepid growth in the first quarter -- when GDP expanded by only 0.7 per cent, the slowest in three years -- as a one-time issue, while emphasizing the continued strong labour market and solid hiring. "The Committee views the slowing in growth during the first quarter as likely to be transitory and continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace," the statement read. The central bank raised rates in March and December, given steady job creation and some signs of mounting price pressures -- and amid the wave of optimism in the early days of President Donald Trump's term, with his promises of tax cuts and big infrastructure spending. High bar for inaction Many economists also discounted the weak first quarter as an anomaly frequently seen in the first three months of the year, and continue to see the need for two more rate moves. Fed-watchers applauded the nuance of the central bank's statement in signaling the continued move away from zero interest rates during the financial crisis, a shift known as policy "normalization." Barclays economists said although the Fed did not take action, "it did something just as important: in the face of weak data, it signaled that it would maintain its normalization path this year." At the same time, the Fed showed no uncertainty about the economy "or hesitation over the path of policy," Barclays added. Given that tone, "we believe the bar for inaction in June is high. To derail June, the economy would need to provide proof of fundamental weakness to the FOMC," the economists said. Mickey Levy of Berenberg Capital Markets noted that central bankers are not as reactive to every swing in data as they had been in the past two years. The Fed "appears to be firmly on a policy normalization track and is not reacting to every piece of high-frequency economic data," Levy said. "It would take a dramatic slowdown in the economy to derail the Fed's normalization plans." 'Solid' job gains Since the last meeting in March, "The labor market has continued to strengthen even as growth in economic activity slowed," the FOMC statement said, with "solid" job gains and another decline in the unemployment rate, which now sits at 4.5 per cent. And while household spending has risen only modestly, "the fundamentals underpinning the continued growth of consumption remained solid." Meanwhile, 12-month inflation has held close to the Fed's two percent target, even while some price measures declined in March. The Fed's beige book survey of the economy prepared in advance of this week's meeting noted reports across the country of firms that had to provide bonuses, and increase wages and benefits, while still struggling to fill openings, even for low-skilled work. Ian Shepherdson, chief economist of Pantheon Macroeconomics, said the rate hikes will be needed to head off inflation as the job market continues to tighten. The FOMC members "have not changed their view that the economy can take a 'gradual' increase in rates, which will be needed to prevent an overshoot of the inflation target as the labor market tightens," Sherpherdson said. (AFP)

US Federal Reserve keeps key lending rate unchanged

The dollar gained Wednesday after the Federal Reserve signaled it was on track to gradually lift interest rates, raising expectations it will again act in June.

The wording of the Fed&#39;s policy statement strengthens the prospect of two more increases in the benchmark lending rate this year, boosting the dollar against the euro and other major currencies.

Global equity markets were mixed. The Dow finished slightly higher, while the S&amp;P 500 and Nasdaq both fell modestly. Frankfurt rose modestly, while London and Paris dipped.

The Fed gave a generally upbeat outlook on the US economy, saying that some weak data in the first quarter were &quot;likely to be transitory&quot; and predicting that economic activity would expand &quot;at a moderate pace.&quot;

Several analysts said the statement clears the way for the US central bank to lift rates next month, although that partly depends on US data. A key release comes Friday with issuing of the US jobs report for April.

&quot;Given the tone of the statement, we believe the bar for inaction in June is high,&quot; a note from Barclays said. &quot;The committee seems eager to look through any weakness and has, at long last, reached a consensus, in our view, that a gradual pace of rate hikes this year is warranted.&quot;

The euro was down against the dollar ahead of Sunday&#39;s second round of France&#39;s presidential election, in which moderate Emmanuel Macron is expected to beat his far-right, anti-EU opponent Marine Le Pen. The two candidates traded insults in a heated TV debate on Wednesday ahead of this weekend&#39;s runoff.

Crude prices remained under pressure after the US government reported a much smaller fall in oil stocks than analysts had expected.

In earnings news, Apple shed 0.3 percent after reporting a 4.9 per cent rise in second-quarter profit to $11 billion. But iPhone sales came in slightly lower than in the year-ago period.

Media shares fell sharply following results from Time Warner that were generally strong, but included disappointing advertising revenue at its Turner broadcasting division. Analysts worry that the growth of streaming services is hitting broadcasting profits.

Disney lost 2.4 per cent, Twenty-First Century Fox, 5.1 per cent and Viacom, 7.3 per cent. All three will report earnings in the coming days.

French oil giant Total meanwhile lost the top market capitalization spot in the Paris CAC 40 index on Wednesday, making way for the luxury behemoth LVMH.

Key figures around 2100 GMT

New York - Dow: UP less than 0.1 per cent at 20,957.90 (close)

New York - S&amp;P 500: DOWN 0.1 per cent at 2,388.13 (close)

New York - Nasdaq: DOWN 0.4 per cent at 6,072.55 (close)

London - FTSE 100: DOWN 0.2 per cent at 7,234.53 points(close)

Frankfurt - DAX 30: UP 0.2 per cent at 12,527.84 (close)

Paris - CAC 40: DOWN 0.1 per cent at 5,301.00 (close)

EURO STOXX 50: UP 0.2 per cent at 3,586.25

Shanghai - Composite: DOWN 0.3 per cent at 3,135.35 (close)

Tokyo - Nikkei 225: Closed for holiday

Hong Kong - Hang Seng: Closed for holiday

Euro/dollar: DOWN at $1.0887 from $1.0925 at 2050 GMT

Pound/dollar: DOWN at $1.2873 from $1.2932&nbsp;

Dollar/yen: UP at 112.67 yen from 112.04 yen

Oil - Brent North Sea: UP 33 cents at $50.79 per barrel

Oil - West Texas Intermediate: UP 16 cents at $47.82 per barrel&nbsp;

(Reuters) 
&nbsp;

The wording of the Fed's policy statement strengthens the prospect of two more increases in the benchmark lending rate this year

The dollar gained Wednesday after the Federal Reserve signaled it was on track to gradually lift interest rates, raising expectations it will again act in June. The wording of the Fed's policy statement strengthens the prospect of two more increases in the benchmark lending rate this year, boosting the dollar against the euro and other major currencies. Global equity markets were mixed. The Dow finished slightly higher, while the S&P 500 and Nasdaq both fell modestly. Frankfurt rose modestly, while London and Paris dipped. The Fed gave a generally upbeat outlook on the US economy, saying that some weak data in the first quarter were "likely to be transitory" and predicting that economic activity would expand "at a moderate pace." Several analysts said the statement clears the way for the US central bank to lift rates next month, although that partly depends on US data. A key release comes Friday with issuing of the US jobs report for April. "Given the tone of the statement, we believe the bar for inaction in June is high," a note from Barclays said. "The committee seems eager to look through any weakness and has, at long last, reached a consensus, in our view, that a gradual pace of rate hikes this year is warranted." The euro was down against the dollar ahead of Sunday's second round of France's presidential election, in which moderate Emmanuel Macron is expected to beat his far-right, anti-EU opponent Marine Le Pen. The two candidates traded insults in a heated TV debate on Wednesday ahead of this weekend's runoff. Crude prices remained under pressure after the US government reported a much smaller fall in oil stocks than analysts had expected. In earnings news, Apple shed 0.3 percent after reporting a 4.9 per cent rise in second-quarter profit to $11 billion. But iPhone sales came in slightly lower than in the year-ago period. Media shares fell sharply following results from Time Warner that were generally strong, but included disappointing advertising revenue at its Turner broadcasting division. Analysts worry that the growth of streaming services is hitting broadcasting profits. Disney lost 2.4 per cent, Twenty-First Century Fox, 5.1 per cent and Viacom, 7.3 per cent. All three will report earnings in the coming days. French oil giant Total meanwhile lost the top market capitalization spot in the Paris CAC 40 index on Wednesday, making way for the luxury behemoth LVMH. Key figures around 2100 GMT New York - Dow: UP less than 0.1 per cent at 20,957.90 (close) New York - S&P 500: DOWN 0.1 per cent at 2,388.13 (close) New York - Nasdaq: DOWN 0.4 per cent at 6,072.55 (close) London - FTSE 100: DOWN 0.2 per cent at 7,234.53 points(close) Frankfurt - DAX 30: UP 0.2 per cent at 12,527.84 (close) Paris - CAC 40: DOWN 0.1 per cent at 5,301.00 (close) EURO STOXX 50: UP 0.2 per cent at 3,586.25 Shanghai - Composite: DOWN 0.3 per cent at 3,135.35 (close) Tokyo - Nikkei 225: Closed for holiday Hong Kong - Hang Seng: Closed for holiday Euro/dollar: DOWN at $1.0887 from $1.0925 at 2050 GMT Pound/dollar: DOWN at $1.2873 from $1.2932 Dollar/yen: UP at 112.67 yen from 112.04 yen Oil - Brent North Sea: UP 33 cents at $50.79 per barrel Oil - West Texas Intermediate: UP 16 cents at $47.82 per barrel (Reuters)

Dollar gains as Fed stays on track for gradual rate hikes

The US Federal Reserve raised interest rates on Wednesday for the second time in three months, a move spurred by steady economic growth, strong job gains and confidence that inflation is rising to the central bank&#39;s target.

The decision to lift the target overnight interest rate by 25 basis points to a range of 0.75 percent to 1.00 per cent marked one of the Fed&#39;s most convincing steps yet in the effort to return monetary policy to a more normal footing.

However, the Fed&#39;s policy-setting committee did not flag any plan to accelerate the pace of monetary tightening. Although inflation is &quot;close&quot; to the Fed&#39;s 2 per cent target, it noted that goal was &quot;symmetric,&quot; indicating a possible willingness to allow prices to rise at a slightly faster pace.

Further rate increases would only be &quot;gradual,&quot; the Fed said in its policy statement, with officials sticking to their outlook for two more rate hikes this year and three more in 2018. The Fed lifted rates once in 2016.

Business investment &quot;appears to have firmed somewhat,&quot; the Fed said in language that reflected a stronger sense of the economy&#39;s momentum.

Fresh economic forecasts released with the statement showed little change from those of the December policy meeting and gave little indication the Fed has a clear view of how the policies of Donald Trump&#39;s administration may impact the economy in 2017 and beyond.

&quot;With gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace,&quot; the Fed said, maintaining language it has used in previous statements.

Stock markets extended their gains and bond yields fell on the benign economic outlook and the continued steady path of interest rate rises signalled by the central bank.

&quot;It relieves some of the fears we&#39;ve had that perhaps the Fed was going to raise rates faster in the future. They&#39;ve chosen not to signal that,&quot; said Brad McMillan, Chief Investment Officer at Commonwealth Financial.

The Fed&#39;s projections showed the economy growing by 2.1 per cent in 2017, unchanged from the December forecast. The median estimate of the long-run interest rate, where monetary policy would be judged as having a neutral effect on the economy, held steady at 3.0 per cent.

The unemployment rate Fed officials expect by the end of the year was unchanged at 4.5 per cent, while core inflation was seen as slightly higher at 1.9 percent versus the previous 1.8 percent forecast.

Fed Chair Janet Yellen is scheduled to hold a press conference at 2:30 p.m. (1830 GMT) to discuss the policy statement.

The rate increase comes amid a broad improvement in the world economic outlook and a sense among Fed policymakers that the US&nbsp;economy is close to the central bank&#39;s employment and inflation goals.

According to the policy statement, risks to the outlook remained &quot;roughly balanced,&quot; the Fed said.

Minneapolis Fed President Neel Kashkari was the only official to dissent in Wednesday&#39;s decision, saying he preferred to leave rates unchanged.

(Reuters) 
&nbsp;

Stock markets extended their gains and bond yields fell on the benign economic outlook

The US Federal Reserve raised interest rates on Wednesday for the second time in three months, a move spurred by steady economic growth, strong job gains and confidence that inflation is rising to the central bank's target. The decision to lift the target overnight interest rate by 25 basis points to a range of 0.75 percent to 1.00 per cent marked one of the Fed's most convincing steps yet in the effort to return monetary policy to a more normal footing. However, the Fed's policy-setting committee did not flag any plan to accelerate the pace of monetary tightening. Although inflation is "close" to the Fed's 2 per cent target, it noted that goal was "symmetric," indicating a possible willingness to allow prices to rise at a slightly faster pace. Further rate increases would only be "gradual," the Fed said in its policy statement, with officials sticking to their outlook for two more rate hikes this year and three more in 2018. The Fed lifted rates once in 2016. Business investment "appears to have firmed somewhat," the Fed said in language that reflected a stronger sense of the economy's momentum. Fresh economic forecasts released with the statement showed little change from those of the December policy meeting and gave little indication the Fed has a clear view of how the policies of Donald Trump's administration may impact the economy in 2017 and beyond. "With gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace," the Fed said, maintaining language it has used in previous statements. Stock markets extended their gains and bond yields fell on the benign economic outlook and the continued steady path of interest rate rises signalled by the central bank. "It relieves some of the fears we've had that perhaps the Fed was going to raise rates faster in the future. They've chosen not to signal that," said Brad McMillan, Chief Investment Officer at Commonwealth Financial. The Fed's projections showed the economy growing by 2.1 per cent in 2017, unchanged from the December forecast. The median estimate of the long-run interest rate, where monetary policy would be judged as having a neutral effect on the economy, held steady at 3.0 per cent. The unemployment rate Fed officials expect by the end of the year was unchanged at 4.5 per cent, while core inflation was seen as slightly higher at 1.9 percent versus the previous 1.8 percent forecast. Fed Chair Janet Yellen is scheduled to hold a press conference at 2:30 p.m. (1830 GMT) to discuss the policy statement. The rate increase comes amid a broad improvement in the world economic outlook and a sense among Fed policymakers that the US economy is close to the central bank's employment and inflation goals. According to the policy statement, risks to the outlook remained "roughly balanced," the Fed said. Minneapolis Fed President Neel Kashkari was the only official to dissent in Wednesday's decision, saying he preferred to leave rates unchanged. (Reuters)

US Fed raises key interest rate by 0.25% for the second time in three months

Wall Street stocks tumbled and the US dollar rallied Wednesday after the Federal Reserve raised interest rates for only the second time in a decade.

The policy-setting Federal Open Market Committee voted unanimously to increase the key federal funds rate to a range of 0.5 to 0.75 per cent, but repeated that the world&#39;s biggest economy likely will require only &quot;gradual&quot; rate increases going forward.

The move was expected but was coupled with a projection that central bankers now expect three interest rate increases in 2017 instead of the previously forecast two.

The decision put the brakes -- at least for now -- on the Dow&#39;s march towards the 20,000-point landmark. The blue-chip index fell 0.6 per cent to close at 19,792.53, halting a seven-day streak of record closes.

The Fed&#39;s decision also led to sharp increases in the yield of the 10-year US Treasury and strengthening of the dollar against other major currencies.

Many analysts expect the central bank will have to raise rates faster if President-elect Donald Trump&#39;s promised infrastructure spending plans and tax cuts are implemented and fuel inflation.

Federal Reserve Chair Janet Yellen agreed such policies can change decisions by central bankers, but cautioned against any premature guessing games.

&quot;I really can&#39;t tell you what the Fed&#39;s response would be to any policy changes that are put into effect,&quot; she said at a news conference.

However, FTN Financial chief economist Chris Low said the Fed&#39;s overall stance was a reality check on runaway enthusiasm about the possibilities for the US economy after Trump&#39;s win.

&quot;We&#39;ve been pricing in faster growth, bigger job gains, tax cuts -- all these positive steps,&quot; Low said. &quot;Today we were reminded that if all that happens, borrowing costs are going to have be a little higher.&quot;

&quot;It&#39;s a reminder you never get unmitigated good outcomes.&quot;

European equities retreated ahead of the Fed announcement. London drifted 0.3 percent lower while Frankfurt shed 0.4 per cent and Paris 0.7 per cent on the day. &nbsp;

Technology shares were mixed as Trump met with a group of industry leaders for the first time since the election. Amazon lost 0.7 percent, while Tesla Motors added 0.3 percent. Google parent Alphabet, Apple and Facebook were little changed.

General Motors dropped 3.8 percent on reports that its China joint venture with SAIC Motor Corp is being investigated for possible antitrust violations. A Bloomberg article citing unnamed people familiar with the matter said some dealerships were being probed over retail pricing practices.

Key figures around 2200 GMT

New York - Dow: DOWN 0.6 percent at 19,792.53 (close)

New York - S&amp;P 500: DOWN 0.8 percent at 2,253.28 (close)

New York - Nasdaq: DOWN 0.5 percent at 5,436.67 (close)

London - FTSE 100: DOWN 0.3 percent at 6,949.19 points (close)

Frankfurt - DAX 30: DOWN 0.4 percent at 11,244.84 (close)

Paris - CAC 40: DOWN 0.7 percent at 4,769.24 (close)

EURO STOXX 50: DOWN 0.6 percent at 3,217.80

Tokyo - Nikkei 225: FLAT at 19,253.61 (close)

Hong Kong - Hang Seng: UP less than 0.1 percent at 22,456.62 (close)

Shanghai - Composite: DOWN 0.5 percent at 3,140.53 (close)

Euro/dollar: DOWN at $1.0533 from $1.0628 Tuesday

Dollar/yen: UP at 117.08 yen from 115.16 yen&nbsp;

Pound/dollar: DOWN at $1.2559 from $1.2665

Oil - West Texas Intermediate: DOWN $1.94 cents at $51.04 per barrel

Oil - Brent North Sea: DOWN $1.82 at $53.90 per barrel

(AFP)

 
&nbsp;

The Fed's decision also led to the strengthening of the dollar against other major currencies

Wall Street stocks tumbled and the US dollar rallied Wednesday after the Federal Reserve raised interest rates for only the second time in a decade. The policy-setting Federal Open Market Committee voted unanimously to increase the key federal funds rate to a range of 0.5 to 0.75 per cent, but repeated that the world's biggest economy likely will require only "gradual" rate increases going forward. The move was expected but was coupled with a projection that central bankers now expect three interest rate increases in 2017 instead of the previously forecast two. The decision put the brakes -- at least for now -- on the Dow's march towards the 20,000-point landmark. The blue-chip index fell 0.6 per cent to close at 19,792.53, halting a seven-day streak of record closes. The Fed's decision also led to sharp increases in the yield of the 10-year US Treasury and strengthening of the dollar against other major currencies. Many analysts expect the central bank will have to raise rates faster if President-elect Donald Trump's promised infrastructure spending plans and tax cuts are implemented and fuel inflation. Federal Reserve Chair Janet Yellen agreed such policies can change decisions by central bankers, but cautioned against any premature guessing games. "I really can't tell you what the Fed's response would be to any policy changes that are put into effect," she said at a news conference. However, FTN Financial chief economist Chris Low said the Fed's overall stance was a reality check on runaway enthusiasm about the possibilities for the US economy after Trump's win. "We've been pricing in faster growth, bigger job gains, tax cuts -- all these positive steps," Low said. "Today we were reminded that if all that happens, borrowing costs are going to have be a little higher." "It's a reminder you never get unmitigated good outcomes." European equities retreated ahead of the Fed announcement. London drifted 0.3 percent lower while Frankfurt shed 0.4 per cent and Paris 0.7 per cent on the day. Technology shares were mixed as Trump met with a group of industry leaders for the first time since the election. Amazon lost 0.7 percent, while Tesla Motors added 0.3 percent. Google parent Alphabet, Apple and Facebook were little changed. General Motors dropped 3.8 percent on reports that its China joint venture with SAIC Motor Corp is being investigated for possible antitrust violations. A Bloomberg article citing unnamed people familiar with the matter said some dealerships were being probed over retail pricing practices. Key figures around 2200 GMT New York - Dow: DOWN 0.6 percent at 19,792.53 (close) New York - S&P 500: DOWN 0.8 percent at 2,253.28 (close) New York - Nasdaq: DOWN 0.5 percent at 5,436.67 (close) London - FTSE 100: DOWN 0.3 percent at 6,949.19 points (close) Frankfurt - DAX 30: DOWN 0.4 percent at 11,244.84 (close) Paris - CAC 40: DOWN 0.7 percent at 4,769.24 (close) EURO STOXX 50: DOWN 0.6 percent at 3,217.80 Tokyo - Nikkei 225: FLAT at 19,253.61 (close) Hong Kong - Hang Seng: UP less than 0.1 percent at 22,456.62 (close) Shanghai - Composite: DOWN 0.5 percent at 3,140.53 (close) Euro/dollar: DOWN at $1.0533 from $1.0628 Tuesday Dollar/yen: UP at 117.08 yen from 115.16 yen Pound/dollar: DOWN at $1.2559 from $1.2665 Oil - West Texas Intermediate: DOWN $1.94 cents at $51.04 per barrel Oil - Brent North Sea: DOWN $1.82 at $53.90 per barrel (AFP)

Dow winning streak ends as Fed hikes interest rates

The US Federal Reserve raised interest rates by a quarter point on Wednesday and signalled a faster pace of increases in 2017 as the Trump administration takes over with promises to boost growth through tax cuts, spending and deregulation.

The rate increase, regarded as a virtual certainty by financial markets in the wake of a string of generally strong economic reports, raised the target federal funds rate 25 basis points to between 0.50 per cent and 0.75 per cent.

&quot;In view of realized and expected labour market conditions and inflation, the committee decided to raise the target range,&quot; the central bank&#39;s policy-setting committee said in its unanimous statement after a two-day meeting.

&quot;Job gains have been solid in recent months and the unemployment rate has declined,&quot; the Fed said, noting that market-based measures of inflation compensation had moved up &quot;considerably.&quot;

More significant was a fresh batch of Fed policymaker forecasts that indicated the current once-a-year pace of rate increases will accelerate next year.

With President-elect Donald Trump planning a simultaneous round of tax cuts and increased spending on infrastructure, central bank policymakers shifted their outlook to one of slightly faster growth, lower unemployment and inflation just under the Fed&#39;s 2 per cent target.

The Fed&#39;s median outlook for rates rose to three quarter-point increases in 2017 from two as of September. That would be followed by another three increases in both 2018 and 2019 before the rate levels off at a long-run &quot;normal&quot; 3.0 per cent.

That normal level is slightly higher from three months ago, a sign that the Fed feels the economy is still gaining traction.

The Fed continued to describe that pace as &quot;gradual,&quot; keeping policy still slightly loose and supporting some further improvement in the job market. It sees unemployment falling to 4.5 per cent next year and remaining at that level, which is considered to be close to full employment.

Fed Chair Janet Yellen is scheduled to hold a press conference at 2:30 p.m. ET (1930 GMT) to elaborate on the decision.

Trump impact

US bond yields had already begun moving higher following the election and as expectations of the Fed rate increase solidified. By the start of this week, trading in fed funds futures assigned a greater than 95 per cent likelihood to a rate hike, according to data compiled by the CME Group.

All 120 economists in a recent Reuters poll had expected a rate hike on Wednesday.

In the weeks following Trump&#39;s November 8 victory, Fed policymakers have said his proposals could push the economy into a higher gear in the short run. Even though the details of the Republican businessman&#39;s plans remain uncertain, Wednesday&#39;s statement marked a rare case in the post-crisis era in which the Fed moved its interest rate outlook higher.

Risks to the outlook remain &quot;roughly balanced&quot; between factors that could slow or accelerate the economy beyond what the central bank anticipates, the Fed said, no change from the November assessment.

The rate increase was the first since last December and only the second since the 2007-2009 financial crisis, when the Fed cut rates to near zero and deployed other tools such as massive bond purchases to stabilise the economy.

(Reuters) 
&nbsp;

The rate increase from the previous range of 0.25 to 0.50% is the first hike since December 2015 and only the second in a decade

The US Federal Reserve raised interest rates by a quarter point on Wednesday and signalled a faster pace of increases in 2017 as the Trump administration takes over with promises to boost growth through tax cuts, spending and deregulation. The rate increase, regarded as a virtual certainty by financial markets in the wake of a string of generally strong economic reports, raised the target federal funds rate 25 basis points to between 0.50 per cent and 0.75 per cent. "In view of realized and expected labour market conditions and inflation, the committee decided to raise the target range," the central bank's policy-setting committee said in its unanimous statement after a two-day meeting. "Job gains have been solid in recent months and the unemployment rate has declined," the Fed said, noting that market-based measures of inflation compensation had moved up "considerably." More significant was a fresh batch of Fed policymaker forecasts that indicated the current once-a-year pace of rate increases will accelerate next year. With President-elect Donald Trump planning a simultaneous round of tax cuts and increased spending on infrastructure, central bank policymakers shifted their outlook to one of slightly faster growth, lower unemployment and inflation just under the Fed's 2 per cent target. The Fed's median outlook for rates rose to three quarter-point increases in 2017 from two as of September. That would be followed by another three increases in both 2018 and 2019 before the rate levels off at a long-run "normal" 3.0 per cent. That normal level is slightly higher from three months ago, a sign that the Fed feels the economy is still gaining traction. The Fed continued to describe that pace as "gradual," keeping policy still slightly loose and supporting some further improvement in the job market. It sees unemployment falling to 4.5 per cent next year and remaining at that level, which is considered to be close to full employment. Fed Chair Janet Yellen is scheduled to hold a press conference at 2:30 p.m. ET (1930 GMT) to elaborate on the decision. Trump impact US bond yields had already begun moving higher following the election and as expectations of the Fed rate increase solidified. By the start of this week, trading in fed funds futures assigned a greater than 95 per cent likelihood to a rate hike, according to data compiled by the CME Group. All 120 economists in a recent Reuters poll had expected a rate hike on Wednesday. In the weeks following Trump's November 8 victory, Fed policymakers have said his proposals could push the economy into a higher gear in the short run. Even though the details of the Republican businessman's plans remain uncertain, Wednesday's statement marked a rare case in the post-crisis era in which the Fed moved its interest rate outlook higher. Risks to the outlook remain "roughly balanced" between factors that could slow or accelerate the economy beyond what the central bank anticipates, the Fed said, no change from the November assessment. The rate increase was the first since last December and only the second since the 2007-2009 financial crisis, when the Fed cut rates to near zero and deployed other tools such as massive bond purchases to stabilise the economy. (Reuters)

US Fed raises key interest rate by 0.25 points, signals more increases

The US Fed is expected to hike interest rates tonight, with most analysts saying the hike is expected to be between 0.25-0.5%. &nbsp;

The Fed had cut interest rates by 0.25% back when the 2008 crash had taken place, to try and increase spending in the US economy. Since then, the interest rates have remained unchanged.&nbsp;

A lower interest rate is indicative of a fragile economy. The lower rate was capitalised on by emerging markets across Asia, including India; investors saw better potential in emerging markets.&nbsp;

The interest rates in emerging markets were higher than the rates in&nbsp;U.S. economy, resulting in flow of capital to the emerging markets for better returns.&nbsp;

The US economy has since improved, and analysts says a rate hike is likely.&nbsp;

In which case, how will emerging markets -- and India -- be impacted?&nbsp;

With the interest rate hike in U.S., experts say there may be capital outflows from emerging markets, and an increase&nbsp;in debt and equity investments in the US.&nbsp;A tight monetary and loose fiscal policy could enhance government spending, strengthening the US economy.

Here in India, there is a chance the rupee might depreciate, which might give rise to a higher current account deficit and higher inflation as the import prices will increase. But brokerages remain confident the Indian economy will hold fort in the long run and any impact will be restricted to the near term.&nbsp;

While Indian monetary policy kept repo rates unchanged, finance minister Arun Jaitley clarified that was not to brace for the impact of a rate hike by the Fed. But that the repo rate remaining unchanged could prepare India better for a hike, should it come.&nbsp;

(WION)

Street estimates say hike expected to be between 0.25-0.5%

The US Fed is expected to hike interest rates tonight, with most analysts saying the hike is expected to be between 0.25-0.5%. The Fed had cut interest rates by 0.25% back when the 2008 crash had taken place, to try and increase spending in the US economy. Since then, the interest rates have remained unchanged. A lower interest rate is indicative of a fragile economy. The lower rate was capitalised on by emerging markets across Asia, including India; investors saw better potential in emerging markets. The interest rates in emerging markets were higher than the rates in U.S. economy, resulting in flow of capital to the emerging markets for better returns. The US economy has since improved, and analysts says a rate hike is likely. In which case, how will emerging markets -- and India -- be impacted? With the interest rate hike in U.S., experts say there may be capital outflows from emerging markets, and an increase in debt and equity investments in the US. A tight monetary and loose fiscal policy could enhance government spending, strengthening the US economy. Here in India, there is a chance the rupee might depreciate, which might give rise to a higher current account deficit and higher inflation as the import prices will increase. But brokerages remain confident the Indian economy will hold fort in the long run and any impact will be restricted to the near term. While Indian monetary policy kept repo rates unchanged, finance minister Arun Jaitley clarified that was not to brace for the impact of a rate hike by the Fed. But that the repo rate remaining unchanged could prepare India better for a hike, should it come. (WION)

US Fed likely to hike interest rates tonight

Asian shares edged lower on Tuesday as investors nervously awaited the outcomes of two-day Federal Reserve and Bank of Japan policy meetings. 
 
&quot;The market is more nervous about the BOJ than the Fed as it may give the market a surprise,&quot; said Yutaka Miura, a senior technical analyst at Mizuho Securities. 
 
Global markets have been blowing hot and cold in recent weeks over the Fed&#39;s intentions, which remain far from clarified after both hawkish and dovish comments from several Fed officials. 
 
The consensus is that the Fed will leave interest rates unchanged at the end of its meeting on Wednesday, with investors focusing on the statement as well as Chair Janet Yellen&#39;s speech for clues on the timing of the central bank&#39;s next interest rate increase. 
 
&quot;It&#39;s a lot of uncertainty, leading into the Fed,&quot; said Jennifer Vail, head of fixed income research at U.S. Bank Wealth Management in Portland, Oregon. 
 
While Vail, like most strategists and investors, expects the Fed to refrain from taking any new steps, she said its statement could include language that&#39;s been missing from its recent assessments, such as whether economic risks were &quot;balanced&quot; or &quot;close to balanced.&quot; 
 
MSCI&#39;s broadest index of Asia-Pacific shares outside Japan slipped 0.2 percent, after major US indexes ended a choppy session nearly flat. 
 
Australian shares were 0.2 percent lower. The Australian Securities Exchange opened without incident on Tuesday after technical faults caused extensive disruptions on Monday. 
 
Japan&#39;s Nikkei stock index erased earlier losses and added 0.1 percent, as trading resumed after a public holiday on Monday. Tokyo markets will be closed for another holiday on Thursday, with the highly-anticipated BOJ meeting sandwiched in between the market closures. 
 
The BOJ could make negative interest rates the primary focus of its monetary policy at the conclusion of its meeting on Wednesday, when it conducts what it described as a &quot;comprehensive&quot; assessment of its policies. 
 
Sources have said BOJ policymakers may consider deepening negative interest rates to show its determination to maintain an ultra-easy policy bias. It unveiled the controversial policy in late January. 
 
&quot;The resulting strength of the yen since then can&#39;t really give them a positive outlook on negative rates,&quot; said US Bank Wealth Management&#39;s Vail, adding that &quot;the risk is for lack of any action, given the lack of consensus&quot; among BOJ members. 
 
Rising speculation that the BOJ will stop short of the dramatic action needed to weaken its currency helped send the dollar to a six-day low against the yen of 101.56 yen on Monday. The dollar was last steady on the day at 101.90 yen. 
 
Wary of a flattening Japanese government bond (JGB) yield curve, the BOJ also could seek ways to steepen the curve, such as making its bond buying more flexible. 
 
Policymakers got a taste last week of how markets might react when investors dumped longer-dated bonds on fears the BOJ would slow its purchasing pace. 
 
&quot;We look for the BOJ to take a more flexible stance on the time horizon for reaching its price stability target and on the pace of its JGB purchases, but expect it to refrain from further easing at this meeting,&quot; strategists at Barclays said. 
 
The euro was also steady at $1.1172, remaining well above Monday&#39;s nearly two-week low of $1.1149. 
 
The dollar index, which tracks the greenback against a basket of six major rivals, was slightly higher at 95.874, though it was shy of Friday&#39;s two-week high of 96.108. 
 
US crude oil futures slipped 0.5 percent to $43.07 a barrel, moving further away from overnight highs. Brent edged 0.3 percent lower to $45.82. 
 
Oil had rallied on Monday before settling off its highs on scepticism over Venezuela&#39;s bid to talk up a potential OPEC output freeze, and on indications US crude stockpiles had risen last week. 
 
Spot gold added 0.2 per cent to $1,315.84 an ounce, on expectations that the Fed will stand pat on rates.

(Reuters)

Global markets have been blowing hot and cold in recent weeks over the Fed's intentions, which remain far from clarified

Asian shares edged lower on Tuesday as investors nervously awaited the outcomes of two-day Federal Reserve and Bank of Japan policy meetings. "The market is more nervous about the BOJ than the Fed as it may give the market a surprise," said Yutaka Miura, a senior technical analyst at Mizuho Securities. Global markets have been blowing hot and cold in recent weeks over the Fed's intentions, which remain far from clarified after both hawkish and dovish comments from several Fed officials. The consensus is that the Fed will leave interest rates unchanged at the end of its meeting on Wednesday, with investors focusing on the statement as well as Chair Janet Yellen's speech for clues on the timing of the central bank's next interest rate increase. "It's a lot of uncertainty, leading into the Fed," said Jennifer Vail, head of fixed income research at U.S. Bank Wealth Management in Portland, Oregon. While Vail, like most strategists and investors, expects the Fed to refrain from taking any new steps, she said its statement could include language that's been missing from its recent assessments, such as whether economic risks were "balanced" or "close to balanced." MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.2 percent, after major US indexes ended a choppy session nearly flat. Australian shares were 0.2 percent lower. The Australian Securities Exchange opened without incident on Tuesday after technical faults caused extensive disruptions on Monday. Japan's Nikkei stock index erased earlier losses and added 0.1 percent, as trading resumed after a public holiday on Monday. Tokyo markets will be closed for another holiday on Thursday, with the highly-anticipated BOJ meeting sandwiched in between the market closures. The BOJ could make negative interest rates the primary focus of its monetary policy at the conclusion of its meeting on Wednesday, when it conducts what it described as a "comprehensive" assessment of its policies. Sources have said BOJ policymakers may consider deepening negative interest rates to show its determination to maintain an ultra-easy policy bias. It unveiled the controversial policy in late January. "The resulting strength of the yen since then can't really give them a positive outlook on negative rates," said US Bank Wealth Management's Vail, adding that "the risk is for lack of any action, given the lack of consensus" among BOJ members. Rising speculation that the BOJ will stop short of the dramatic action needed to weaken its currency helped send the dollar to a six-day low against the yen of 101.56 yen on Monday. The dollar was last steady on the day at 101.90 yen. Wary of a flattening Japanese government bond (JGB) yield curve, the BOJ also could seek ways to steepen the curve, such as making its bond buying more flexible. Policymakers got a taste last week of how markets might react when investors dumped longer-dated bonds on fears the BOJ would slow its purchasing pace. "We look for the BOJ to take a more flexible stance on the time horizon for reaching its price stability target and on the pace of its JGB purchases, but expect it to refrain from further easing at this meeting," strategists at Barclays said. The euro was also steady at $1.1172, remaining well above Monday's nearly two-week low of $1.1149. The dollar index, which tracks the greenback against a basket of six major rivals, was slightly higher at 95.874, though it was shy of Friday's two-week high of 96.108. US crude oil futures slipped 0.5 percent to $43.07 a barrel, moving further away from overnight highs. Brent edged 0.3 percent lower to $45.82. Oil had rallied on Monday before settling off its highs on scepticism over Venezuela's bid to talk up a potential OPEC output freeze, and on indications US crude stockpiles had risen last week. Spot gold added 0.2 per cent to $1,315.84 an ounce, on expectations that the Fed will stand pat on rates. (Reuters)

Asia stocks waver as investors nervously await Fed, BOJ

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