HONG KONG: Asian markets mostly rose Thursday after the Federal Reserve cut interest rates, but investors were left unsure about its next possible move.
While the Fed met expectations with a 25-basis-point reduction, the lack of strong forward guidance disappointed many, who were also concerned about a growing split in the policy board between hawks and doves.Equity traders have spent much of this month in a positive mood, betting that central banks are taking a more accommodative tone with monetary policy to support the stuttering global economy, reports AFP.
The European Central Bank unveiled a fresh round of bond-buying stimulus and another rate cut this month, and there had been hopes the Fed would indicate a further reduction in borrowing costs this year.
Fed boss Jerome Powell said the board did not expect a recession but trade uncertainty is creating “cross winds”, hitting business investment and exports. He added the bank will “will act as appropriate” to maintain economic growth.
However, the board is split, with five members expecting or preferring a rate hike by the end of the year, five seeing no change, and seven forecasting or wanting to see another cut.
Tim Foster at Fidelity International pointed out that policymakers’ so- called “dot plot” projections do not show any consensus for further cuts this year.
“After raising rates nine times in the past four years, the Fed kicked off the wave of global central bank easing with their dramatic dovish pivot in January,” he said.“But simple rate cuts are now rather old-fashioned compared to the ECB’s comprehensive and complicated package of easing measures last week.”