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Bank Of America Investment The U.S. central bank, the Federal Reserve, Wednesday continued to gradually move short-term interest rates higher, raising the overnight federal funds rate one quarter point to two percent.

The central bank's commitment to continue to raise interest rates has helped to keep the Euro steady near its record highs.

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Feb 2, 2005 (AXcess News) The Fed raised key interest rate a quarter of a point Wednesday which marked the Central Banks sixth rate hike for fed fund rates, bringing bank lending rates to 2.5 percent.The Fed fund rate increase came as no surprise to the market after the Central Bank' makers, led by Alan Greenspan, Chairman.

Banc Of America Investment Nov 11, 2004 (AXcess News) New York - The U.S. central bank, the Federal Reserve, Wednesday continued to gradually move short-term interest rates higher, raising the overnight federal funds rate one quarter point to two percent.

JPY Yesterday, The USD strengthened against the JPY rising to 116.09 from 115.74 after the BOJ, as expected, kept its benchmark interest rate stable at 0.5% and kept its estimations of the national economy unchanged. As it seems for the near future, the BOJ will cooperate with US and European central banks by holding its benchmark interest rate, as it would find it hard to raise rates at the time when U.S. central bank is cutting them.

Banking Investment It is the fourth one quarter point increase in five months. The cumulative one percent rise to two percent still leaves short-term interest rates below the three percent inflation rate. In its statement, the federal open market committee said the economy is showing strength despite the sharp run up in gasoline prices.It said inflationary pressures are being contained. Bill Gross, who manages the world's biggest bond investment fund in California, believes the central bank is signaling that there will be at least one more rate increase in the months ahead. "You know what the Fed is trying to do is balance unemployment and inflation," said Bill Gross. "They're looking for that sweet spot, the neutral fed funds rate. And it appears that in the Fed's view it is not at two percent."

The same sentiment is shared by the Swiss National Bank who raised interest rates by 25bp yesterday, bringing the mid point of their target range to 2.5 percent.

Investment Solution Strategic After oil prices doubled in the past year some economists were predicting that the central bank would go slow in future rate rises because of weakness in the economy. However, last Friday's positive jobs report, which showed far more jobs being created than had been expected, may have influenced this week's decision to raise rates.As the world economy slowed in 2001, the U.S. central bank aggressively cut interest rates, dropping the fed fund rate 13 times over a 30-month period. The now-recovering U.S. economy is currently growing at about a four percent annual rate.Advertisement

The consensus seems to be that yesterday's current account data solidified expectations that the Bank of Japan could raise interest rates as early as August.

Investment Banking Services Source: Voice of America

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