U.S. stocks end volatile day lower as Fed lifts rates

Market opens in green post Fed rate hike
US Fed goes for 25bps rate hike in Jerome Powell's first meeting as chair
Author

24 March, 2018

"This decision marks another step in the ongoing process of gradually scaling back monetary policy accommodation - a process that has been under way for several years now", Powell said in opening remarks to reporters that signaled policy continuity with his predecessor, Janet Yellen. The Fed has said it expects to raise interest rates a total of three times this year, and one of the key debates on Wall Street is whether it will wind up increasing rates three times or four.

However, this time, the tone of the commentary by the US Fed Chairman remained less hawkish and hence we do not see much volatility in the exchange rate of INR against Dollars.

The improved outlook is aided by firming economic growth in rest of the world, simulative fiscal policy and overall accommodative financial conditions.

"The statement would suggest it's open season on the dollar and greenlights sellers to re-engage as the Fed failed to confirm any of the markets' hawkish suspicions", said Stephen Innes, head of Asia-Pacific trading at OANDA.

Would rising inflation in recent months argue for a faster pace of rate increases?

This is the fourth time the Fed-which is the central bank of the USA -has raised interest rates since 2017, and it's the sixth time since the financial crisis, which began in 2008.

The dollar tumbled Wednesday while USA stocks dipped after the Federal Reserve lifted interest rates but suggested it would not speed up the pace of additional hikes in 2018. Most importantly, the Committee indicated there could be three if not four hikes this year and next and the rate at which the funds rate could top out at is also higher than previously projected. The US economy grew at an annualised rate of more than 3% during some quarters past year, while the unemployment rate is hovering at 4.1% - the lowest since 2000.

Currently, US inflation is running at 2.2% (for the year to February) which is slightly above the Fed's target of 2%.

Another nor'easter could dump more snow over ME this week
Keep checking back with Severe Weather Team 11 on wpxi.com for updated forecasts as this storm system develops and approaches. The snow's weight will likely mean more trees and power lines falling, causing outages throughout the area, Simpson said.

Normally, a hike in interest rate in the United States does not augur well for the emerging markets and commodities.

It is generally true that higher rates favor savers while lower rates favor borrowers - but the Fed does not directly control the rates consumers get on their bank accounts and mortgages.

Some analysts say a short-term economic stimulus from Congress - in the form of a $1.5 trillion tax cut and federal spending increases - could eventually push the Fed to add a fourth rate move.

Chairman Jerome Powell, picked by Trump to lead the USA central bank, said policy makers had not altered their economic outlook following the president's announcement of trade tariffs on steel and aluminum and threats of measures against Chinese goods.

A healthy job market and a steady if unspectacular economy have given the Fed the confidence to think the economy can withstand further increases within a still historically low range of borrowing rates. A sharp rise in wage growth reported in the government's January jobs report triggered fears that higher labor costs would lead to higher inflation and, ultimately, to higher interest rates.

Two-year US yields slipped to 2.304 percent from 9 1/2-year high of 2.366 percent.

Other measures of the economy, though, have been more sluggish. What's more, the Fed has routinely overpredicted the path of the economy during the recovery and now long but slow expansion.


More news


  • Video Of Uber's Self-Driving Car Killing Pedestrian Released

    Video Of Uber's Self-Driving Car Killing Pedestrian Released

    Behind the wheel was the driver, but to react to the appearance of women on the road he couldn't. Wednesday I wrote about a fatal crash in Tempe , Arizona involving an autonomous Uber vehicle.
    New York Jets finalizing deal with quarterback Teddy Bridgewater

    New York Jets finalizing deal with quarterback Teddy Bridgewater

    At 6-4 and 230 pounds he spent four seasons at Wisconsin, where he threw for 7,635 yards with 48 touchdowns and 37 interceptions. He posted a passer rating higher than 100 in eight games, the second most by a Jets quarterback in a single season.
    Nate Solder to sign four-year, $62 million contract with Giants

    Nate Solder to sign four-year, $62 million contract with Giants

    Last night a small piece of good news was delivered: The Patriots will re-sign core special teamer Nate Ebner to a two-year deal. Without Solder, the Patriots have a massive void at left tackle, where he started for the majority of the past seven seasons.
  • Del Potro outlasts Federer to win Indian Wells final

    Del Potro outlasts Federer to win Indian Wells final

    He committed six forehand errors , including one return, while contributing just one forehand return victor . Del Potro will now head to south Florida with the other ATP players to compete in the Miami Masters.
    Russian Federation  to expel 23 United Kingdom  diplomats

    Russian Federation to expel 23 United Kingdom diplomats

    A British policeman was also poisoned when he went to help them and remains in a serious but stable condition. Thursday saw an exchange of openly insulting language between British and Russian ministers.
    Butler: 'I never got a reason (for Super Bowl benching)'

    Butler: 'I never got a reason (for Super Bowl benching)'

    He said he hasn't talked to Belichick since the Super Bowl , and thus doesn't know why for sure, but he has a theory. Butler played alongside Ryan and signed under Robinson, formerly Bill Belichick's director of college scouting.
  • Neymar Reportedly Thinks '5 Months Have Felt Like 5 Years' at PSG

    Neymar Reportedly Thinks '5 Months Have Felt Like 5 Years' at PSG

    He also advised the media to ask Real Madrid Florentino Perez about any purported move, a recurring theme yesterday: "He is happy there".
    Indian Wells: Rising star Naomi Osaka wins 1st title

    Indian Wells: Rising star Naomi Osaka wins 1st title

    Naomi Osaka had just won her first WTA title on Sunday, and was understandably finding it hard to put the achievement into words. Open victor Sloane Stephens, No. 2 Caroline Wozniacki , No. 10 Angelique Kerber and No. 8 Venus Williams .
    Packers sign Bears' Kyle Fuller to offer sheet

    Packers sign Bears' Kyle Fuller to offer sheet

    The Green Bay Packers are looking to solve their cornerback problem while making one of their biggest rivals weaker. The former Virginia Tech star could now find himself the subject of a bidding war between the Bears and Packers .
  • Trump Loses Bid To Dismiss Accuser's Defamation Lawsuit

    Trump Loses Bid To Dismiss Accuser's Defamation Lawsuit

    Maria Glover, a law professor at Georgetown University, said that the decision will nearly certainly go to appeal. Zervos said that after appearing on Trump's show in 2006 she asked him for a job.
    EU, British negotiators hail major progress on Brexit deal

    EU, British negotiators hail major progress on Brexit deal

    The EU secured agreement that Britain would offer residence rights to EU citizens who arrive after Brexit but before 2021. He argued that Mrs May had been able to "fudge" the issue until now but that strategy "doesn't work any more".
    Federer wins at Indian Wells, sets up rematch with Chung

    Federer wins at Indian Wells, sets up rematch with Chung

    Federer's flawless year continued thanks to his 7-5 6-4 victory over Jeremy Chardy en route to the quarter-finals on Wednesday. I was very happy that I was able to win the tournament there, not just get to the semis and get world number one.