Banks raise rates after fed interest increase

India (is) well prepared.

Wall Street led global equity markets lower on Thursday a day after the US Federal Reserve’s first interest rate hike in almost a decade, as continued pressure on oil weighed on energy-related stocks.

“This action marks the end of an extraordinary seven-year period during which the federal funds rate was held near zero to support the recovery of the economy from the worst financial crisis and recession since the Great Depression”, Yellen said.

“Indeed, if the market strongly believes that the Fed will continue to raise rates as per the [Fed ” s] dot plots, then the dollar may continue pushing a lot higher since most other major central banks are still very dovish.

The Federal Reserve Open Market Committee decides monetary policy for the U.S. The committee announced the change Wednesday in a statement on economic policy.

“End of uncertainty and accommodative outlook for future will help policy makers in emerging economies”, Das added. So all they need to do is stabilise.

You may have come across the news that the US Federal Reserve has made a decision to raise interest rates, although you may not think that financial events happening in the US will have much of an impact on United Kingdom soil. For Britain, higher United States interest rates give the Bank of England the flexibility to start normalising rates on this side of the Atlantic as well. An increase in rates also weakens the appeal of assets like gold which don’t bear interest.

For months, Chair Janet Yellen and other Fed officials have said they expected any rate hikes to be small and gradual.

After the rate hike, attention turned immediately to the likely timing of the next move.

The last time interest rates were rising, gold rose 11% within a year of the first rate increase despite subsequent hikes, they said.

Banks that include Wells Fargo & Co., JPMorgan Chase & Co. and Bank of America Corp. raised their prime rate to 3.5 percent from 3.25 percent, according to Reuters. Economists say higher rates would tend to slow growth and make it less likely that inflation will rise sharply and harm the economy.

Moreover, with Fed hiking rates, yield differential might prompt exodus of Dollar from the system, so Banxico had little choice but to follow FED.

A Hermes Investment Management report predicted United States interest rates will peak “some years down the line” at 3.75%, below historic averages of 5%.