Display mode (Doesn't show in master page preview)

17 Dec 2015

International Economy

Fed Raises Rate to 0.25-0.50 Percent and Signals Gradual Hikes in 2016 (Business Brief No.3593)

After the Fed signaled an intent to raise its key rate over recent months, the Federal Open Market Committee (FOMC) finally resolved to do so at its December 15-16 meeting for the first time since mid-2006, up 0.25 percent to 0.25-0.50 percent over the 0.00-0.25 percent before.
The FOMC meeting statement indicates that the US economy has sufficiently recovered from the 2007-2008 financial crisis. New economic projections disclosed after the meeting indicate that the US economy should expand steadily in 2016, thus prompting the Fed to raise its Fed Funds rate in gradual steps ahead.

We at KResearch have assessed that the Fed may increase that rate at least twice during 2016. This would have a ripple effect on the US Dollar relative to Asian currencies – including the Baht – and yields in Thai bond markets. Nevertheless, financial markets will have to assess further signals from each round of the FOMC meeting in 2016 to ascertain the timing of subsequent rate hikes going forward.

International Economy