US Fed’s rate increase: Blackrock, Charles Schwab, Invesco, JPMorgan and PGIM Fixed Income on the future of interest rate movements
- The US Fed raised its key interest rate by 25 basis points, from a target range of zero to 0.25 per cent, to a range of 0.25 per cent to 0.5 per cent
- That officially ended the era of zero interest rates as the monetary authority kept the cost of capital cheap to bolster an economy being ravaged by the Covid-19 pandemic
The United States Federal Reserve System (Fed) raised its key interest rate by 25 basis points, from a target range of zero to 0.25 per cent, to a range of 0.25 per cent to 0.5 per cent.
That officially ended the era of zero interest rates, in place since March 2020 as the monetary authority kept the cost of capital cheap to bolster an economy that was being ravaged by the Covid-19 pandemic.
With inflationary pressure seething in the US, the Fed envisages a total of seven rate increases this year, followed by another four next year, taking the Fed funds rate to 1.9 per cent by the end of 2022 and 2.8 per cent by the end of 2023.
Here are what global banks and analysts are saying about the Fed’s move, one of the most anticipated economic events in the world:
1). Rick Rieder, Chief Investment Officer of Global Fixed Income at Blackrock, which has US$2.8 trillion of fixed-income assets under management
Today [was the start of] a new era of monetary policy tightening in the United States. Coming exactly one week after the end of the quantitative easing process, the Fed is embarking upon a clear move higher in rates and is signalling future balance sheet reductions (likely beginning sometime in the summer).
