Asian shares down on Fed hike, Sino-US trade anxiety

If core consumer price inflation surprises on the upside this week Amazon may be one of the culprits

If core consumer price inflation surprises on the upside this week Amazon may be one of the culprits

The Fed has raised rates seven times since late 2015 on the back of the economy's continuing expansion and solid job growth, rendering the language of its previous policy statements outdated.

"Having twice as many press conferences does not signal anything about the pace or timing of future interest rate changes", Powell said. The Fed expects unemployment to fall to 3.6% this year, and, said Powell, "Most people who want to find jobs are finding them".

Fed Governor Lael Brainard, among the most dovish policymakers least anxious to tighten, said on May 31 "the sizable fiscal stimulus that is in train is likely to provide a tailwind to growth in the second half of the year and beyond". The Fed is raising rates gradually to keep the economy in check.

Announcing the decision to increase its target for the fed-funds rate to a range of 1.75% to 2%, the Fed described the U.S. jobs market as "strong" and said economic activity had been rising at "a solid rate".

"The economy doesn't need two more rate hikes, especially with geopolitical risks", such as tariffs, which could slow growth in the USA and around the world, said Gary Pollack, head of fixed-income trading at Deutsche Bank Private Wealth Management.

Economists had predicted the Fed would make this change to overcome the common view that the central bank will not change the benchmark interest rate at a meeting that does not include a press conference, which limits its options. The Fed's preferred price gauge - the Commerce Department's personal consumption expenditures index - rose 2 per cent from a year earlier in March and April, after spending most of the past six years below it. The media forecasts expect the unemployment rate to drop to 3.6% this year, down from March's projection of 3.8%. In the longer run, it maintained the forecast for 1.8% growth.

"The labour market has continued to strengthen. economic activity has been rising at a solid rate", the Fed said in its statement. The committee's forecast for the long-run sustainable growth rate of the economy held at 1.8 per cent, suggesting policy makers are skeptical of the effect of tax cuts on the economy's capacity for growth.

The committee sees further declines the unemployment. Risks to the economic outlook appear roughly balanced. Inflation for the next two years is expected to remain at 2.1%, unchanged from the previous forecast. Inflation expectations are slightly higher this year compared to March's forecast of 1.9%.

The Fed said its policy of further gradual rate increases will be "consistent with sustained expansion of economic activity, strong labour market conditions, and inflation near the Committee's symmetric 2 per cent objective". This assessment will take into account a wide range of information, including measures of labour market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and global developments.

Recommended News

  • ‘Dhadak’ trailer: Watch Janhvi Kapoor and Ishan Khatter in ‘Sairat’ remake

    ‘Dhadak’ trailer: Watch Janhvi Kapoor and Ishan Khatter in ‘Sairat’ remake

    Incidentally, Ishaqzaade , too, was loosely inspired by Romeo and Juliet and went on to become one of the biggest hits of 2012. Janhvi said that as an actor she has tried to follow her mother's advice which was to work hard and feel every emotion.
    Taliban orders its first ceasefire in 17-year battle

    Taliban orders its first ceasefire in 17-year battle

    USA forces in Afghanistan confirmed Thursday they would respect the Afghan government's ceasefire with the Taliban , with Gen. Qureshi further added that at least nine Taliban insurgents were also wounded during the clashes with the security personnel.
    Rashford shines as England cruise past Costa Rica

    Rashford shines as England cruise past Costa Rica

    And for the first time since May 2016, an England home game had an atmosphere! "I feel blessed and inspired every day". They are at an age and have hunger, enthusiasm and no little quality so they can certainly keep improving.
  • What if Lebron James goes to Boston?

    What if Lebron James goes to Boston?

    Other possible destinations are the Boston Celtics , the San Antonio Spurs , the Miami Heat and dare I say it, the Warriors . Whatever is next, James said his family will play a major role. "I let the emotions get the best of me".
    Trump to Macron: EU Worse Than China on Trade

    Trump to Macron: EU Worse Than China on Trade

    Canadian Prime Minister Justin Trudeau has repeatedly criticized Trump in recent days, calling the move "totally unacceptable". Canada and Mexico, the other members of the 1994 pact, have been frustrated by the slow pace of talks to renegotiate NAFTA.
    Trump turns tables on G7 allies with free trade `proclamation'

    Trump turns tables on G7 allies with free trade `proclamation'

    Saturday's clashes ended a summit that was marked by repeated disagreements between the United States and its closest allies. Minutes after that statement was published online, Trump complained about comments made by Trudeau and revoked his support.
  • Trump trade adviser Navarro apologizes for 'inappropriate' Trudeau comments

    Trump trade adviser Navarro apologizes for 'inappropriate' Trudeau comments

    Ottawa says it is discussing how it could help steel and aluminium workers affected by the recent imposition of US tariffs. Canada's foreign minister Chrystia Freeland said her country "does not conduct its diplomacy through ad hominem attacks".
    Manafort hit with third superseding indictment by Mueller; former associate also charged

    Manafort hit with third superseding indictment by Mueller; former associate also charged

    Manafort is now under house arrest, awaiting trials scheduled for Virginia and Washington, D.C., later this year. Gates and van der Zwaan both pleaded guilty to charges brought against them by the special counsel's office.
    UFC 225: Michelle Waterson Talks 'Great Villain' Colby Covington

    UFC 225: Michelle Waterson Talks 'Great Villain' Colby Covington

    McGregor could have potentially won a title in a third class in the fight, which no UFC fighter has accomplished. During an global media call last week, dos Anjos referred to Covington as a "worse version of Conor McGregor ".
  • Cristiano Ronaldo not bothered by Real Madrid future, says Manuel Fernandes

    Cristiano Ronaldo not bothered by Real Madrid future, says Manuel Fernandes

    But La Liga chief Tebas has tried to reassure both Atletico and Real fans that their star players will not leave this summer. Ronaldo was once again in stunning form for Real Madrid last season, netting 44 goals in all competitions.
    Skyrim Very Special Edition is Real and Out for Amazon Echo

    Skyrim Very Special Edition is Real and Out for Amazon Echo

    Once the Skill is linked to your device, you then say "Alexa, Open Skyrim " and the quest starts. It's all fun and games, until you realise you can actually play Skyrim: Very Special Edition .
    Formula 1 Canadian Grand Prix preview

    Formula 1 Canadian Grand Prix preview

    And then taking a sweet victory and winning the Canadian GP for the first time since Schumacher did so in 2004. Vettel wasn't happy about the number of cars on track unaware of the drivers approaching them on a flying lap.

We are pleased to provide this opportunity to share information, experiences and observations about what's in the news.
Some of the comments may be reprinted elsewhere in the site or in the newspaper.
Thank you for taking the time to offer your thoughts.