With Fed rate hike expected, 5 things to look for Wednesday

IDX trade and membership director Alpino Kianjaya said that the Fed Fund Rate hike is likely to lift interest rates higher. But they should not be looking for any sudden boosts in their income: Banks tend to be quick when cutting CD payouts – and mighty slow when it comes to raising them. The Fed has said it would raise rates when it saw a sustained recovery in the economy. Assuming the Fed doesn’t shock the market with a further delay, the real key will be how the central bank telegraphs future rate increases.

But in the hours ahead of the announcement, gold prices marched higher as some traders chose to lock in gains on bearish wagers and move to the sidelines, said Bob Haberkorn, a senior commodities broker with RJO Futures in Chicago.

Andrew Sentance, a former member of the Monetary Policy Committee, said the news might bring the issue of United Kingdom interest rate rises “back into focus”.

However, many remain uncertain that the economy is ready for the Fed to raise rates. That was enough to produce a unanimous vote on the policy-setting Federal Open Market Committee, as even members who had argued publicly for delaying a rate hike delay went along with Fed Chair Janet Yellen and other policymakers.

The U.S. dollar has already appreciated significantly against most other currencies, and that trend will likely continue as foreign investors enter the U.S. markets in search of higher interest rates.

Today finally there is nearly certainty that US Federal Reserve will hike rates by 25 basis points, for first time in nearly a decade and officially ending long seven years of accommodation.

With the USA economy showing continued strength, an increase in interest rates had been anticipated for some time-it was mostly just a question of when.

“I think Janet Yellen will give us one of the most dovish press conferences ever”, says Ed Yardeni, president and chief investment strategist of Yardeni Research.

The Fed has kept the rate locked next to zero – officially zero to 0.25 per cent – since December 2008, having slashed it to counter the impact of financial crisis and economy’s plunge into recession.

But why have rates been so low for so long? “However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data”. “When these positives are weighted against the risks inherent in excessively low rates, a rate hike is the most prudent path”. Conventional wisdom is that as prevailing interest rates rise, bond yields will increase and prices will fall. And it expressed more confidence that inflation, which has been running well below the Fed’s 2 percent target, would begin rising.

“Buyers at this point: Get used to the fact that you may not be able to qualify for it as much, but you’re still gonna be able to get a nice house in the marketplace”, said Chris Galler, CEO of the Minnesota Association of Realtors.