US interest rates - what goes up, must come down

Assessing impact of recent rate hike

The path towards the normalisation of US interest rates has developed a new twist, says EFG Asset Management's global head of research Daniel Murray - an increase in rates over the next two years followed by a reversal.

The Federal Reserve recently raised its benchmark short-term interest rate by a quarter percentage point and signalled that two more hikes are likely this year. The decision moves the funds rate target to a range of 1.75% to 2%. The Federal Open Market Committee (FOMC) changed various phrases in its statement relative to the previous one, highlighting a more optimistic view on economic growth and higher inflation expectations. Wages and prices The modest increase in US wages seen in recent years was cited as a 'surprise' by Jerome Powell, the new Fed chair, at his first FOMC press ...