Fed Delays Interest Rate Hike In Yesterdays Announcement, But It Could Come Sooner Than Thought
In an announcement made yesterday, the US Federal Reserve confirmed that they'd keep interest rates on hold, but in a direct reference to the next policy meeting, the US Central Bank hinted at the possibility of a rate hike occurring in December. Yesterday's announcement came as no major surprise to global markets, however, not everyone was expecting the reference to the December meeting. At the start of this week, markets had viewed the earliest point of an interest rate coming in March, however, it now looks like this could occur sooner than expected.
Monetary Policy Makers at the US Central Bank also pointed to strong rates of growth in consumer spending as well as business investment and also dismissed concerns that a global economic slowdown could cause the strength of the US economy to stumble.
USD moved broadly higher as a result of yesterdays announcement, with Fed Funds Futures showing a greater probability of a rate rise now occurring in December.
Earlier on today, we saw growth in the US economy slow sharply in the third quarter, however, consumer spending continued at a steady pace, which would suggest that a rate rise would now happen sooner rather than later. As we move closer towards the end of they year, it will certainly be intriguing to see how things unfold.