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16 March 2017
Last night the US Federal Reserve increased interest rates for the second time in three months. The raise – the third since the 2008 financial crisis – increases rates to a range of 0.75-1 per cent.
Joel Dungate, investment analyst at Redmayne-Bentley, said:
“The US Federal Reserve’s decision to raise its interest rate by 25 basis points, last night, was widely anticipated. Janet Yellen had already strongly signalled a tightening in monetary policy due to the continuing strength of the US economy. This rise raises the question of whether the Fed are going to stick to their previous guidance of three rate rises this year, or will the strength of the economy force the central bank to be more aggressive in its monetary tightening.
“This decision also has implications for the global economy - will the US economy be able to drive growth, or will the differences in monetary policy between the US and most of the other major economies create unforeseen problems? A strong dollar is usually bad news for emerging markets, which hold high levels of Dollar-denominated debt. Meanwhile in the UK, the Pound has already weakened significantly since last year’s EU referendum and may struggle to recover against the Dollar so long as the policies of the Bank of England and Fed remain so divergent.”
Notes to the Editor
Established in 1875, Redmayne-Bentley is one the UK’s largest independently owned investment management and private client stockbroking firms, with 37 regional offices throughout the UK and in the Republic of Ireland.
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