FTSE 100 Slips As Fed Increases Interest Rates

The FTSE 100 has slipped after the US Federal reserve announced an increase in interest rates. The Fed raised interest rates by 25 basis points, with a new target range of 1% to 1.25%.

shareprices.com - Thursday, June 15, 2017

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This is the second interest rate rise in three months, and most analysts expect that the Fed will increase rates once more this year. The Fed expects that inflation will not hit the current target, of two percent, and it has revealed plans for unwinding the post-asset purchasing balance sheet, which currently totals almost $4.5 trillion.

Michael Hewson of CMC Markets says that after spending six weeks preparing investors for the rate rise, it would have been unwise for the Federal Reserve to hold off on the increase, but the weak inflation figures, and a weak first quarter, together raise cause for concern.

Policymakers are determined not to show that they are concerned, and are noting that the weakness is likely transitory. They are keeping the door open for an additional rate increase later in the year that would get the rates back on track.

The Dow Jones closed up by 46 points last night, while the S&P 50 was negative, as were the Asian markets. The FTSE 100 appeared on the back foot after those difficulties in foreign markets, also remaining under pressure because of fears that the Brexit deal negotiations are likely to leave the UK walking away with a less than optimal trade and economic deal.


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