Trump budget chief sees Fed continuing accommodative rate policy

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Trump budget chief sees Fed continuing accommodative rate policy

The policy makers agreed to increase its benchmark rate by a quarter point to a new range of 1 percent to 1.25 percent. A neutral rate implies no negative effect on growth.

Experts said that the State Bank of Việt Nam's policies on exchange rates helped the market avoid external shocks, adding that the Fed rate hikes would not have significant impacts on VNĐ/USD exchange rates.

It seems the Fed is no longer data dependent as before and wants to carry on with the normalization process despite weakness seen in some economic releases.

The central bank also indicated plans to raise interest rates one more time in 2017, further weighing on gold prices. However, with the increased risk of political turmoil, it's highly unlikely that the BoE will hike rates anytime soon unless inflation went out of control. "The start of balance sheet runoff and the fact that they haven't slowed their projected path of rate hikes suggest they can do both balance sheet and rate hikes at the same time", said Gennady Goldberg, interest rate strategist at TD Securities. The Fed expects that inflation will not hit the current target, of two percent, and it has revealed plans for unwinding the post-asset purchasing balance sheet, which now totals nearly $4.5 trillion. US shares looked set to open lower, with Dow futures down 0.4 per cent and S&P futures off 0.6 per cent. A local expert says the US rate hike could actually help Korea resolve its massive household debt problem, which topped a staggering 1.2-trillion USA dollars in the first quarter.

The Fed also gave a first clear outline on its plan to reduce its $4.2 trillion portfolio of Treasury bonds and mortgage-backed securities, most of which were purchased in the wake of the 2007-2009 financial crisis and recession. Only Neel Kashkari, president of the Minneapolis Fed bank, opposed the increase.

It is bloated with the huge number of U.S. government bonds, or treasuries, and mortgage-backed bonds it bought in the years after the 2008 financial crisis in order to lower long-term interest rates and pump prime the economy with cash.

The gold price in the global market saw huge fluctuations after the Fed rate hikes. The Nasdaq Composite Index dropped 60.09 points, or 0.97 percent, to 6,134.80.

CURRENCIES: The dollar rose to 109.64 from 109.57 yen.

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