Asian markets rise after historic Fed decision

The move by the Fed’s Open Market Committee to lift its key rate by a quarter-point – to a range of 0.25 percent to 0.5 percent – is the first increase since the panel pushed the key rate to 5.25 percent on June 29, 2006.

“The Committee now expects that, with gradual adjustments in the stance of monetary policy, economic activity will continue to expand at a moderate pace and labor market indicators will continue to strengthen”, the reserve said in a statement. If economic conditions change, the Fed may change course.

“Overall, we believe Fed and Chair Janet Yellen succeeded in being neither too hawkish nor too dovish”, they said.

“Any increase in rates is an opportunity to breathe a little life back into those [profit] margins”, Greg McBride, chief financial analyst at Bankrate.com, told CNNMoney. However, with interest rates near zero, economic growth tepid and the Fed having undertaken unprecedented stimulus efforts due to the 2008-2009 financial crisis, this cycle of rate hikes looks to be different.

The Reserve Bank is counting on the New Zealand dollar falling against the U.S. dollar over the coming months as a result of its interest rate increases.

“Given the economic outlook, and recognizing the time it takes for policy actions to affect future economic outcomes, the Committee made a decision to raise the target range for the federal funds rate to 1/4 to 1/2 percent”.

After a surge in New York, Europe, and Latin America, the news brought rallies across Asian markets as well, with Toyko gaining 2.29 percent by the break, Hong Kong climbing 1.3 percent and Shanghai 1.6, while Sydney clocked a 1.8 percent rise. Wall Street seemed relieved by the Fed’s decision to get the first rate hike out of the way, as the will-they or won’t-they dialogue has served as a major uncertainty and headwind for stocks in 2016.

It was a small increase – 0.25 percent – but at least it was better than having rates at basically zero.

“I think a lot of folks are going to say “oh the feds raised interest rates” thank heavens they feel the economy is strong enough to stand that”, said Robert Porter, Quinnipiac University. Market expectations are that inflation will fall. That is in line with the consensus view of economists that the Fed’s target for the federal funds rate – the that banks charge on overnight loans – will end next year around 1 percent.

“If we focus more on our own personal economies instead of worrying about the national economy we can have more of an impact on our own homes day to day”, Hogan said.