Yesterday the US central bank signalled the end to seven years of a monetary policy that began amid the worst financial crisis since the Great Depression.
After holding its benchmark federal-funds rate near zero for seven years, The Fed’ increased interest rates by 0.25% yesterday. The move signals a drawing to a close of a period of monetary policy that was introduced during the worst financial crisis since the Great depression back in 2008.
The hike in ‘rates signals the return to normality in the world’s largest economy and has generally been welcomed by investors, with markets surging round the world. This is counter-intuitive as increases in interest rates are usually associated with a reduction in economic activity and poor market returns.
We would guess that the many customers will also welcome this move as it presages an increase in rates in the UK, which would knock-on to higher interest rates for cash on deposit. We may well follow this move sometime next year.
