Fed Raises Rates with promises of further tightening

As expected the Federal Reserve raised interest rates by 25bps to 1.25%. Furthermore, a new programme of balance sheet reduction will be underway by clearing a fixed amount of assets each month, though the start date is yet to be confirmed.

 

An update to the ‘dot plot’ graph shows the median expectation among policymakers of one more rate hike this year, possibly scheduled for September. Furthermore, this will be followed by a continued pattern of hikes in 2018 and 2019.

 

This is a result of new economic growth projections which indicate that the most powerful economy in the world is on the rebound following Q1 slowdown.

 

US Dollar strength has inevitably occurred in the morning trading session on the London market with Cable down 1 cent from Wednesday mornings open at 1.2725.