FTSE slides as US Fed interest rate decision nears

Other European markets extended losses on Friday, after the U.S. Federal Reserve ‘s overnight decision to hold interest rates at record lows fanned worries over the health of the global economy.

“If the Federal Reserve was making decisions on the basis of the U.S. economy you could certainly make a case for a move up in the Fed funds rate, but given the very weak inflation outlook a rate rise now could be construed as a very unusual decision indeed, particularly given how uncertain the global outlook is right now, which suggests any decision later today might well not be unanimous in either direction, for a hike, or unchanged”.

The FTSE 100 was treading water in morning trading at around 6229 – the same level that it closed at last night. The central bank had earlier this year been expected to raise interest rates for the first time in September, signalling an end to the extraordinary monetary policy post-credit crisis.

“Against that backdrop, the case for raising United Kingdom interest rates in the current environment is, for me, some way from being made”, he said in a speech prepared for delivery at the Portadown Chamber of Commerce in Northern Ireland. The pound late Thursday in New York was buying $1.5589. “Actually what’s concerning everybody is what’s going on in China, and the effect that that’s going to have on global growth”. Most mining stocks were trading higher in London, with Randgold Resources Ltd. RRS, +3.49% up 3.4% and precious metal miner Fresnillo PLC FRES, +2.88% up 2.9%.

“We were surprised at how explicit Janet Yellen was about the growth risks coming from emerging markets”, wrote Dermot O’Leary, chief economist at Goodbody Stockbrokers, wrote in a Friday note.

Traders were left in limbo after the Fed’s much-anticipated announcement offered little clue as to when a USA rates hike will eventually come.