Dow craters 369 as slowdown reality sets in

23 Dec 2015 | Author: | No comments yet »

The anomaly behind the Fed’s rate hike.

The Federal Reserve’s decision to raise short-term interest rates for the first time since the financial crisis was, in its own words, a vote of confidence in the United States economy – even as much of the rest of the world struggles. Notably, following the 2008 financial crisis and the Great Recession, which came to end in mid-2009, the FOMC decreased the rate to zero nearly seven years ago on Dec 16, 2008. “With the Fed out of the way and only a couple of trading sessions left before Christmas, we could now see a traditional end-year rally”, Philippe Gijsels, head of research at BNP (Paris: FR0000131104 – news) Paribas Fortis Global Markets in Brussels, said. The global headwinds stemming from difficulties in emerging economies such as China, Russia and Brazil could further suppress inflation and hurt hiring, possibilities that the Fed might struggle to model. “While there is a drag from net exports, from relatively weak growth overseas and the appreciation of the dollar, overall, we decided today that the risks to the outlook for the labour market and the economy are balanced”, she said.

Losses for gold futures were building on Thursday, as the metal succumbed to some dollar strength in the wake of the first interest-rate increase by the U.S.

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