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Updated 14:18 24/02/20

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US raises benchmark interest rate by 0.25%

Duncan Richardson, News Editor
16 Mar 2017, 10:05 a.m.

For the second time in three months, the federal reserve took the decision to increase interest rates by 0.25%. The hike was widely expected, but the cautious tone adopted by Fed Chair Janet Yellen caused the U.S. dollar to fall and the gold price to rise over $20 per ounce. It appears the markets were expecting a more hawkish outlook for the U.S. economy.

Despite expressing reservations over future growth, the Fed is expected to raise rates again in June and December. Despite the rhetoric, the Fed has only managed to raise interest rates three times in the last 10 years.

The Bank of England is set to keep interest rates unchanged today as the UK prepares to trigger article 50. Experts from Investec believe that rates in the United Kingdom are set to remain unchanged until 2019. The gold price has risen 7% this year as traders favored haven assets following Donald Trump election and elections in Holland, France and Germany.

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