Interest rates likely to rise ccih up to 5pc if inflation picks up again
US and eurozone governments agree to ease measures to prevent deflation in the second half of this year but there is already talk that interest rates could rise dramatically to 5pc at the start of 2017.
Economists with US-based Capital Economics believe rates could be hit up to 5pc on the back of an intensification of credit growth from investment. This in turn would boost inflation to 5pc by the middle of this year, a key target of the Fed as it tries to get borrowing costs un바카라der control.
The Fed's bond-buying programme has yet to conclude, but the prospect of increased QE has boosted inflation expectations despite low prices.
It has encouraged firms to raise cash, as they did when they bought their US bonds last year, and boosted inflation expectations last month for the first time in years.
The rate is "too low", said Andrew Haldane, an independent market strategist in Sydney and an economist at ICIS Markets and Co in Sydney. "The thing that's changed most is the confidence of investors that there's been an acceleration of progress."
Economists had been expecting US markets to have their biggest annu바카라사이트al rise for two years since mid-2015, with inflation expected to surge to 2pc in 2017 and 4pc in 2018.
Capital Economics said the recent expansion in economic confidence "may have created the conditions for a sustained tightening in US and eurozone interest rates at a time w우리카지노hen there is significant uncertainty for global inflation, market participants and the international economy".
That said, economists in Europe and the US said they still expected interest rates to rise to 5pc at some point this year.
Ahead of Thursday's rate increase, Goldman Sachs and other analysts had expected a 6pc rise.
But the US Federal Reserve said on Friday: "This time will not be the first, it will not be the last, it will not be the average of the last six, but it will definitely be the largest."
The Fed said it would consider the impact of any increase in interest rates in a separate statement on Sunday.