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Economy Watch: Fed Sure of Economy, Raises Rates, Promises Asset Sell-Off

21 Juin 2017

The weaker pound's impact on Britons' living standards started to reflect in the latest data releases and today's retail sales figure may fall sharply after increasing 2.3% in April.

The dollar index, which tracks the US currency against six major peers, was last up 0.6 percent, and rose as high as 97.557, its highest since May 30.

"The economy is doing well, is showing resilience", Yellen said at a quarterly news conference. "That is the main reason why the dollar is remaining supported for now", said Manuel Oliveri, currency strategist at Credit Agricole in London. The euro edged up to $1.1219 from $1.1217.

U.S. stocks edged lower and prices of U.S. Treasuries pared gains after the Fed's policy statement.

People woke up to the news in Mumbai, while the Sensitive Index (Sensex) of the Bombay Stock Exchange, which had closed at 31,155 was trading lower at mid-day on Thursday at 31,125 points. The central bank bulked up its holdings to about $4.2 trillion in assets, including a lot of Treasury bonds and mortgage-backed securities, beginning during the dimmest days after the Panic of 2008 to stave off an even deeper depression. Fed leaders suggested they still expect to raise rates again later in the year.

"They have taken a cautious approach to balance sheet normalisation, but they have begun it and it's definitely a tightening of policy", said ING strategist Martin van Vliet. The rest of them said it would make such a move at its December 12-13 meeting.

Police arrest 15 men for 'celebrating' Pakistan win over India
It was formalities for Pakistan after that and they clinched the win by bowling out India for 158 in the 31st over. India were asked to produce the highest successful run chase in Trophy history, and had the weapons to do it.

The Federal Reserve raised interest rates on Wednesday for the second time in three months, forecasting one more hike this year. There would be gradually rising monthly offloading targets for different types of securities that the Fed holds on its balance sheet.

"In this climate, there are no incentives to buy the dollar", she said.

Federal Reserve head Janet Yellen justified the decision by highlighting the resilience of the USA economy, which has been buoyed by a robust labour market.

"It's true that the central bank is under increased pressure to raise its benchmark rate", said Lee of BNK Securities. In a separate report from the Labor Department's, Consumer Price Index declined 0.1 percent in May.

The move registered swiftly in markets, with the territory's one-month interbank rate, known as HIBOR, jumping the most in six months, and a gauge of property stocks in Hong Kong retreating more than 1 percent.

They lowered projections for 2017 to 1.6% from their March estimate of 1.9%.