In Asia, share markets surged on Thursday in morning trade, tracking the overnight rally in the USA after the Fed kept interest rates unchanged on Wednesday despite hints of a hike later in the year.
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Stocks are opening higher on Wall Street as energy stocks rise along with the price of crude oil. That could be key for Argentina, especially at a moment in which the country needs cheap credit to finance President Mauricio Macri’s economic reforms.
It also hinted that it will likely raise rates this year because the USA job market has strengthened and economic activity has picked up even though business investment is soft and inflation remains low. The central bank said risks to its economic outlook are “roughly balanced”. Decisions are made by members of the Federal Open Market Committee, which meets eight times a year.
Yellen’s answer at Wednesday’s post-meeting news conference was that there is no inflation threat, so there is no hurry; and she said that if the Fed holds off raising rates maybe even more people will find work.
Bullion gained late on Wednesday as the Fed stayed pat on interest rates in the world’s biggest economy. Inflation remains below the USA central bank’s target of 2 per cent and members saw room for improvement in the labour market. “The economy has a little more room to run”. It expects the economy to expand just 1.8 percent this year and by an nearly equally sluggish 2 percent in both 2017 and 2018.
The Philippine central bank left its benchmark interest rate unchanged at 3% on Thursday, expecting inflation to remain subdued.
However, experts have warned the relief could be short-lived, with the policymakers increasingly expected to act in December, once the U.S. elections are out of the way.
The Fed slightly adjusted its outlook on the labor market as it expects the USA unemployment rate to hit 4.8%, up from June’s forecast of 4.7%.
However, the economic releases following the address weren’t very supportive of a rate hike, dousing expectations.
Yellen also pushed back against criticism that the Fed is losing any credibility, arguing that it’s good all Fed officials don’t have the same opinion and there’s a range of voices. The eurozone economy is growing slowly, but inflation remains well far below the ECB’s 2 percent annual target.
For the first time in almost two years, there were three dissents to the Fed’s statement Wednesday, including Federal Reserve Bank of Boston president Eric Rosengren. Last December, the Fed had signalled four rate increases during 2016, but that did not happen.
The economy expanded sluggishly in the second quarter and added fewer jobs than expected in August.
The dollar index fell to 95.048, its lowest point since September 12.
The meeting of the United States central bank’s key committee came well past the closing bell at Indian bourses.
Bank of America stock is traded at more than one-third of a discount, which makes the stock attractive for investors.
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In addition to the Fed’s low-interest-rate policy, an increasing number of global central banks are toying with negative interest rates.
