Federal Reserve’s ‘dovish hike’ sends shares to record highs, dollar dips
Fed raises US interest rates; Says gradual hikes further
London, March 16: World stock indexes surged to record highs on Thursday while the dollar traded close to a one-month low after the Federal Reserve hiked U.S. interest rates but signaled no pick-up in the pace of tightening.
Markets also reacted positively after Dutch center-right Prime Minister Mark Rutte fought off a challenge by anti-immigration, antiEuropean Union rival Geert Wilders to score an election win seen as a victory against populist nationalism.
The result, along with the Fed statement, handed the euro its biggest one-day jump in nine months, with the single currency climbing above $1.07 for the first time since early February late on Wednesday and staying above that level, though a touch down on the day, in European trade on Thursday.
The MSCI world equity index, which tracks shares in 46 countries, jumped 0.7 per cent on the day to reach an alltime high after the Fed lifted its funds rate by 25 basis points, but said further increases would only be “gradual”.
Yields on 10-year US Treasuries nursed their heaviest falls since last August.
“It was a well-prepared hike, and when you consider the fact that Yellen and Co kept the outlook for growth and inflation largely unchanged, I would call this a dovish hike,” said DZ Bank analyst Rene Albrecht, in Frankfurt.
It was a well-prepared hike, and when you consider the fact that Yellen and Co kept the outlook for growth and inflation largely unchanged, I would call this a dovish hike
— RENE ALBRECHT, Analyst, DZ Bank