Walls’ Street: Fed on hold again, markets not surprised
The US Federal Reserve opted to keep its interest rates on hold this morning – a move most were expecting.
Fed chairwoman Janet Yellen affirmed there would be two more hikes this year (in December she said there would be four in 2016)
She also revised down the US’ economic growth forecast for 2016 from 2.2% to 2.0% and its outlook for 2017 to 2.0%, down from 2.1%.
But Mrs Yellen’s vision for the long term is a bit murkier.
“We are quite uncertain about where rates are heading in the longer term,” Mrs Yellen told a news conference after the rate decision.
Many are now speculating whether the Fed will hike rates in its next meeting, in July and after the all-important “Brexit” referendum on June 23.
It is still no clearer what the result of the referendum will be, with polls showing a thin margin between the “Brexit” camp, and those in favour of remaining in the EU – what has come to be known as “Bremain.”
Concerns about a Brexit continues to weigh on investors’ minds in both in the UK and in Europe.
This week, the German 10-year government bond dropped below zero percent, the first time in the country’s history this has occurred.
Although the European Central Bank’s (ECB) easy money policies – ultra-low-interest rates and quantitative easing – are forcing bond prices down, it is believed concerns about the UK leaving the EU were what tipped the German bond into negative territory.