First published: Nikkei Asian Review, 16/03/2016
Higher interest rates could disrupt region’s economic growth
The U.S. Federal Reserve raised interest rates for only the third time this decade at its Wednesday meeting. The policy rate now stands at 0.75-1%. The hike itself was heavily discounted, but markets were tuned in to the Federal Open Market Committee’s hints as to what might happen next. The Fed now expects interest rates to increase twice more this year, with the median projection rising to 1.4% at the end of this year, and then to just over 2% at the end of 2018.
If the Fed is right, then we now have a proper tightening cycle for the first time since 2004, rather than the one-off mini-shocks triggered by the “taper tantrum” of 2013, when the Fed announced an end to its policy of quantitative easing, and raised rates twice, at the end of 2015 and 2016….Read more: