US Federal Reserve chair Janet Yellen’s announcement of an official rate hike marked a significant milestone for the world’s financial markets.
In one of the year’s most anticipated market events, the Fed raised its official fed funds rate by 25 basis points to a range of 0.5 to 0.75 per cent.
While the hike came as a surprise to no one, the Fed’s projection that it could raise rates three more times in 2017 was seen as a more aggressive, or hawkish, stance than was generally expected.
The US 10-year bond yield bumped up to 2.57 per cent for the first time since 2014, giving investors yet more evidence that world interest rates are finally on the move after a seemingly interminable post-Global Financial Crisis hiatus.
At 0.5 to 0.75 per cent, the fed funds rate is still a long way short of the 3 per cent norm.
Janet is saying: “interest rates are going nowhere but UP!”.