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Rene Pastor

The Federal Reserve kept US interest rates unchanged and expressed confidence in the economic outlook which may open the door for an interest rate increase in June.
In its statement, the Fed said it will “maintain the target range for the federal funds rate at ¼ to ½ per cent.”
“The stance of monetary policy remains accommodative, thereby supporting further improvement in labour market conditions and a return to 2 per cent inflation,” it said.
The policy-setting Federal Open Market Committee (FOMC) said the US labour market had improved despite the hiccup caused by a recent economic slowdown and it was keeping a close watch on inflation.
“Inflations is expected to remain low in the near term as the transitory effects of declines in energy and import prices dissipate and the labour market strengthens further,” the statement added.
“The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate.”
The US Central Bank raised rates for the first time in nearly a decade last December 2015, signalling the start of what it hopes to be the normalisation of US monetary policy.
The Fed will be meeting on June 14-15 which analysts are pointing to as the time it may raise rates if the US economy keeps up its modest rate of growth.
GDPNow, the Atlanta Fed’s measure of economic growth, estimated first-quarter expansion at an annual rate of 0.6 per cent as of Wednesday. Growth in the last quarter of 2015 was also weak, at 1.4 per cent on an annualised basis, said the Commerce Department. It will hand out preliminary first-quarter figures Thursday for US gross domestic product.
Any movement in US interest rates immediately impacts Hong Kong, whose peg to the US dollar means US rates would affect rates for the vitally important Hong Kong housing and real estate market.

In US markets, the Dow Jones industrial average rose 51.23 points, or 0.28 per cent, to 18,041.55, the S&P 500 gained 3.45 points, or 0.16 per cent, to 2,095.15 and the Nasdaq Composite fell 25.14 points, or 0.51 per cent, to 4,863.14.
“They’ve reassured the market it’s going to be a slow and gradual pace and that they expect the economy to improve moderately,” said Michael Arone, the Boston-based chief investment strategist at State Street Global Advisors’ US intermediary business. “It was about as expected and they made their comments as wide in scope as possible and as a result there’s not much you can grasp onto to say they’re going to change their path.”
The S&P 500 was up about 3 per cent since the Fed’s last meeting, when policy makers balked at lifting rates and signalled a slower pace for increases, citing risks from “global economic and financial developments” that could weigh on US growth. Fed Chair Janet Yellen reiterated last month that the central bank will proceed cautiously.
The recent equity rally has lost momentum following a four-month peak on April 20, as a batch of muted earnings reports failed to provide fresh impetus to send the S&P 500 higher. The benchmark index has rebounded 14 per cent since a 22-month low in February, helped by surging oil prices and optimism the Fed will remain supportive of growth. It briefly climbed within 1 per cent of its May record last week, before receding.
Apple Inc.’s first sales drop in more than a decade sapped investor sentiment about corporate earnings, sending the Nasdaq 100 Index on Wednesday to the lowest in nearly a month. Apple’s weak earnings report dragged down the broader tech group, which fell to the lowest level in six weeks.
With additional reporting by Bloomberg


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US interest rate moves impacts Hong Kong, especially key housing market; Wall Street ends higher after Fed announcement


.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}US interest rate moves impacts Hong Kong, especially key housing market; Wall Street ends higher after Fed announcement

US interest rate moves impacts Hong Kong, especially key housing market; Wall Street ends higher after Fed announcement