Fed signals new policy phase, and six further rate hikes?

The Federal Reserve’s decision to raise its benchmark rate for the second time in three months, has led to speculation of further rises this year, with another four to come in 2018.

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“However, following the hike in rates yesterday, the rise in the stockmarket, the fall in government bond yields and the fall in the dollar were all more consistent with a Fed that was easing monetary policy rather than tightening it,” said Patel.

“The Fed fear another taper tantrum, which led to a larger than expected tightening in financial conditions, but now appear to have overcompensated by delivering hikes with such dovish undertones.

“Despite rich valuations, risk assets are likely to perform well until the Federal Reserve sound more serious about tightening monetary policy.”

 

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