Spreadex Market Update
Stocks surge after Fed raise rates
While this move doesn’t sound like much, a quarter of one percent, it is extremely significant. After 8 years of almost zero interest rates the Federal Reserve has finally decided to try to return to “normal”.
Federal Reserve chairman Janet Yellen cited increased household spending, investment by businesses and the continued low rate of inflation as she announced the FOMC’s decision. The rate hike was a dovish one as future action will depend on the strength of the US economy. Yellen known for being a cautious governor did not want to overdo it, stating that future rate hikes will be gradual.
Many believe that this will increase the pressure on Bank of England governor Mack Carney to raise rates in 2016. This would continue the trend of the UK raising their rates after the US does. However the BOE insists that the economy is still not strong enough.
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