Five key questions to ask following the US Fed rate hike
By , 17 Mar 17
The third 0.25% interest rate hike of this upcycle from the US Federal Reserve begs five questions, all of which have implications for the US, the globe and portfolios.
The Fed has bought around $3.9trn worth of bonds since 2008, and there has been an apparently close correlation between the size of the Fed’s balance sheet and the S&P 500, Mould said.
“In theory, sterilising QE could see that reverse, unless strong earnings growth can take up the slack – so it is understandable that equities are rallying hard in the wake of an FOMC meeting where the issue does not appear to have arisen,” he added.
The Federal Open Markets Committee statement made no reference to closing down QE at all, so the issue remains and is “probably to the delight of equity market bulls”.
Tags: Federal Reserve | US
