Asian shares fall after Fed rate hike, tracking Wall St lead

GBPUSDJune14

GBPUSDJune14

The US Federal Reserve increased its key interest rate by 0.25% to a 1.00%-1.25% range on Wednesday, maintaining its view that three total rate hikes in 2017 will be appropriate.

The Fed's statement outlining its plans for balance sheet reduction noted that the process would continue until the Fed's balance sheet shrinks to a size conducive to an efficient, effective monetary policy.

The precise timing of a rate hike remains unclear, but there are signs that the central bank is veering toward a tightening stance.

The rise was widely anticipated after a low unemployment rate, but other economic gauges, including inflation, have been weaker.

This Fed rate hike was expected, and in fact had been considered a certainty, according to the CME FedWatch Tool.

"Long-term Fed expectations remain very much supported".

Expressing confidence that the USA economy is recovering, the Federal Reserve said America's labour market has "continued to strengthen" and economic activity has been "rising moderately" so far this year. The decision which was taken on Wednesday was in the 8-1 vote. Kashkari is president of the Fed bank of Minneapolis.

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The Bank of England chose to leave the record low interest rate unchanged, in a split vote, as more policymakers sought a rate hike.

That is the highest level since the year 2008 when rates were cut by the policymakers to encourage borrowing and spending after the financial crises.

Meanwhile, Hong Kong's de facto central bank followed the Fed and boosted interest rates for a third time since December past year, elevating the risk of a sell-off in the world's priciest housing market. But inflation has been tame - at least, it's been low by the Fed's favorite measurement.

WALL STREET ON WEDNESDAY: The Standard & Poor's 500 index edged 0.1 per cent lower, to 2,437.92. That dynamic spurs economic growth. That effort resulted in a five-fold increase in its portfolio to $4.5 trillion.

In her press conference after the announcement, Fed Chair Janet Yellen asserted that USA economic growth appears to have rebounded enough to justify both higher rates and a return of Fed-held assets to the wider market.

Later in the day, the bond market focus is likely to shift to Greece euro zone finance ministers meet to discuss a deal with the International Monetary Fund that could pave the way for new loans for Athens. But by raising short-term rates, the Fed is blowing a gentle headwind against the economy.

"With rate markets pricing in a 90-per-cent chance of a hike, and inflation break-evens so beaten down, delivering another "dovish" hike seems hard", Mr.

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