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FTSE 100 smashes 6,900 and pound breaks $1.30 as risk appetite returns after a divided Fed holds rates steady

A divided Fed keeps rates steady, signals one hike by end of year

For those who missed the rate decision from the Fed, here’s what happened: 

The US Federal Reserve left interest rates unchanged on Wednesday but strongly signaled it could still tighten monetary policy by the end of this year as the labor market improved further.

Fed Chair Janet Yellen, speaking after the central bank’s latest policy statement, said US growth was looking stronger and rate increases would be needed to keep the economy from overheating and fueling high inflation.

“We judged that the case for an increase has strengthened but decided for the time being to wait,” Yellen told a news conference. “The economy has a little more room to run.”

Yellen said she expected one rate increase this year if the job market continued to improve and major new risks did not arise.

The Fed kept its target rate for overnight lending between banks in a range of 0.25 percent to 0.50 percent, where it has been since it hiked rates in December for the first time in nearly a decade.

The central bank has appeared increasingly divided over the urgency of raising rates. On Wednesday, Kansas City Fed President Esther George, Cleveland Fed President Loretta Mester and Boston Fed President Eric Rosengren dissented on the policy statement, saying they favored raising rates this week.

At the same time, policymakers cut the number of rate increases they expect this year to one from two previously, according to the median projection of forecasts released with the statement. Three of the 17 policymakers said rates should remain steady for the rest of the year.

The Fed also projected a less aggressive rise in interest rates next year and in 2018, and cut its longer-run interest rate forecast to 2.9 percent from 3.0 percent.

Report from Reuters

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FTSE 100 smashes 6,900 and pound breaks $1.30 as risk appetite returns after a divided Fed holds rates steady Reviewed by on . A divided Fed keeps rates steady, signals one hike by end of year For those who missed the rate decision from the Fed, here's what happened:  The US Federal Res A divided Fed keeps rates steady, signals one hike by end of year For those who missed the rate decision from the Fed, here's what happened:  The US Federal Res Rating:
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