Fed deliver first rate hike of 2018

Yesterday’s markets

22nd March 2018

  • GBP - Retail Sales m/m
  • GBP - MPC Official Bank Rate Votes
  • GBP - Official Bank Rate

Overnight the Federal Reserve delivered on their highly anticipated first rate hike of 2018, raising interest rates from 1.5% to 1.75%. They also forecast steeper rate hikes in 2019 and 2020. However, the Dollar dropped sharply as the Fed opted to follow a more cautious plan for this year, keeping in line with their original plan to raise rates a total of three times in 2018. The markets predicated the Fed were going to change their original plan to add another hike in this year.

Today’s markets

21st March 2018

  • CAD - CPI m/m
  • CAD - Core Retail Sales m/m
  • USD - Core Durable Goods Orders m/m

Flash Manufacturing and Services PMI out of the Eurozone fell short of expectations this morning. Despite figures indicating expansion in both industries, this has slowed significantly recently with the strong Euro and threat of a potential trade war weighing on the confidence.

Back in the UK, the Bank of England are expected to leave rates unchanged in the latest Monetary Policy Committee meeting. With the positive UK Labour report yesterday, the markets will be watching the rate votes closely for any deviation from the expected 0-9. The market will also be looking to the policy statement for any signals to support the markets expectations of a May rate hike.