17 Mar The US Federal Reserve starts raising interest rates
Key Points:
- The Fed has finally joined other central banks in raising interest rates, taking the Fed Funds rate from a range of 0-0.25% to 0.25-0.5%. This was well flagged and reflects the tight US labour market and high inflation.
- The Fed flagged another six rate hikes this year and the start of quantitative tightening soon.
- First rate hikes in a tightening cycle don’t normally signal the end of a bull market in shares but they are consistent with a more constrained & rougher ride. High inflation & the war in Ukraine also add to the risks.
- Reflecting similar but less intense inflation pressures, the RBA is expected to start raising rates in June.