Taiwan's central bank unlikely to follow Fed's rate hike

Taiwan's central bank unlikely to follow Fed's rate hike

The Fed on Wednesday raised its overnight benchmark interest rate by 25 basis points to a range of 0.75 percent to 1.00 percent and forecast two more rate hikes this year.

The good news from the hike is the planned trajectory for U.S. interest rates.

The Fed governors expect two further rises this year and three in 2018 and see rates at a still-moderate 3 per cent by 2019, broadly unchanged from their previous estimates. The Fed's projections, according to the AP, anticipated 2.1 percent economic growth this year and 1.9 percent growth next year.

"The cost of borrowing is going to continue to increase and variable rate debt like credit cards are most susceptible", he told NewsHour in an email. The increase is in line with the expected rate hikes by the United States Federal Reserve this year.

"The economy still remains far below where it was predicted it should be in the beginning of the crisis", said Mike Konczal, a fellow at the Roosevelt Institute, in arguing for continued low rates.

As widely expected, the Fed effected the third-rate hike in a decade in its March meeting.

Bank officials said the time was right to raise rates with inflation and unemployment close to Fed's targets of 2 percent and roughly 4.5 percent, respectively.

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It is the first hike since US President Donald Trump came into power with pledges to boost the economy, and the third since rates were lifted from near zero in late 2015 for the first time in nine years.

The focus is now on the Reserve Bank of New Zealand (RBNZ)'s policy review on March 23 with expectations it will keep rates at a record low of 1.75 percent. The Fed's key metric for watching price increases- the US price index for personal consumer spending, excluding energy and food costs - hit 1.7 percent in January, not far off from the Fed's target of 2 percent.

"We have not discussed in detail potential policy changes, that could be put into place, and we have not tried to map out what our response would be to particular policy measures", Yellen said about Trump's planned tax cuts and infrastructure spending.

The dollar edged higher against the yen on Friday in Asia in a light regional data day with direction focused on end of the week indicators in the USA, including consumer sentiment.

Gold prices are sharply higher Thursday, on a "sell the rumor, buy the fact" scenario following the US rate hike.

Now the pace of interest rate increases look to be finally speeding up, backed - as the Fed statement on Wednesday said - by rising employment and increasing inflation.

Domestically, local financial markets will be looking to Thursday's release of December quarter GDP data, which is expected to show the economy grew by 0.7 per cent over the quarter.