Stock markets around the world increased their level of swings after the recent decision of the Federal Reserve on interest rates. On July 31, the Fed decided to keep interest rates unchanged as it balance between the positive and negative signals on the economy. This had been expected by investors who expected a cut in the rates in order to free sectors that have been stretched by high rates for quite some time.
Market Reactions
After the announcement, U. S. stock markets went up in the short term, as investors are bullish on the Fed’s ability to stimulate the economy. But, inflation persistence and its effects on future rate changes were the cause of such fluctuations. This was echoed by the European and Asian markets and investors considered the effect of the Fed’s position on global factors.
Outlook Ahead
Experts believe that the Fed’s action may affect other central banks, especially in Europe and Asia, as they go about their business. Once these reports are digested by the markets, focus will turn to the next economic indicators and earnings reports that will determine the mood of the market in the following weeks.
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