AMP Oliver’s Insights – US Rate Rise

AMP’s Dr Share Oliver takes a look the impact of the US Federal Reserve’s decision to raise interest rates in this edition of Oliver’s Insights.

A summary of the key points is as follows:

  • After much delay and much warning the Fed has finally raised the Fed Funds rate from a range of 0-0.25% to 0.25-0.5%. The move signals confidence in the ongoing recovery in the US economy after the GFC.
  • Given ongoing deflationary risks and slow global growth future Fed hikes are likely to be cautious and gradual.
  • With the Fed decision out of the way, global shares are likely to resume their rising trend but with US shares as a relative underperformer.
  • Bond yields are likely to remain low which should be positive for real assets.
  • Rising US interest rates will help maintain downwards pressure on the value of the $A through 2016.

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Oliver’s Insights