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Sarah
Money Manager
Joined: 16 Jul 2004
Posts: 831
Cash Points ££ 12024.38
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 Posted: Thu May 11, 2006 3:12 pm Post subject: The Fed raises US interest rates to 5% |
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The US Federal Reserve raised interest rates for the 16th time in a row, to five-year highs of 5%.
The central bank`s Federal Open Market Committee (FOMC) had been widely expected to raise the federal funds rate at its second meeting under new chairman Ben Bernanke.
Thr accompanying Fed statement hinted that there may be a brief pause in the current cycle of rate rises, which began in June 2004.
"The (FOMC) sees growth as likely to moderate to a more sustainable pace, partly reflecting a gradual cooling of the housing market and the lagged effects of increases in interest rates and energy prices," the FOMC said.
"As yet, the run-up in the prices of energy and other commodities appears to have had only a modest effect on core inflation, ongoing productivity gains have helped to hold the growth of unit labor costs in check, and inflation expectations remain contained. The (FOMC) ... emphasizes that the extent and timing of any (future rate hikes) will depend importantly on the evolution of the economic outlook as implied by incoming information."
Recent data showed consumer prices had risen 0.3% in March to an annual rate of 2%, the top end of Federal targets.
Meanwhile, the latest US employment data showed that 138,000 jobs were created in April, the lowest level since last October.
Looks highly likely the BOE will be forced to follow suit at somepoint this year |
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Wade
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Joined: 17 Feb 2005
Posts: 185
Cash Points ££ 2569.94
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| Posted: Thu May 11, 2006 3:35 pm Post subject: |
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| yep, only a matter of time before the UK raises rates, usually we have higher interest rates than the USA so now with the USA at 5% we are lagging them far behind ! |
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Quinn
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Joined: 06 Feb 2005
Posts: 181
Cash Points ££ 2817.02
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| Posted: Fri May 12, 2006 8:11 pm Post subject: |
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One of the main reasons for raisng interest rates in the US is that their inflation is running a lot higher than ours and thus their currency the $ is falling.
Where the UK is concerned inflation is low and the currency is strong and hence there is not much pressure for higher rates overhear, yet !
If inflation rises or the £ falls somewhat then there may be a need to raise rates, but until then I don't see why Britain should follow the US higher ?  |
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Wade
Saving Enthusiast
Joined: 17 Feb 2005
Posts: 185
Cash Points ££ 2569.94
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| Posted: Sat May 13, 2006 12:05 am Post subject: |
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| yeh, your right, UK rate rises are not a done deal, I think what happens in europe will determine what happens in the UK more than what happens in the US, now if the euro bank starts raising rates then we will see higher UK rates so for the moment we are safe ! |
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Sarah
Money Manager
Joined: 16 Jul 2004
Posts: 831
Cash Points ££ 12024.38
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| Posted: Thu May 18, 2006 1:29 am Post subject: |
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| The bond markets have already comeoff somewhat from the highs early in the year, we are talking significant falls ! Perhaps bonds now look attractive, even if interest rates may rise |
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housebuyer
Money Saver
Joined: 02 May 2005
Posts: 81
Cash Points ££ 2815.22
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| Posted: Sat May 20, 2006 2:24 am Post subject: |
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| But the US has been raising interest rates for the last 2 years whereas ours have stayed still or fallen ! ITS NOT A done deal that rates will rise over here as well ! |
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newsaver
Newbie
Joined: 28 Feb 2005
Posts: 12
Cash Points ££ 202.10
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| Posted: Mon May 22, 2006 3:51 am Post subject: |
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| So when are UK interest rates likely to follow the US rates higher ? |
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