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Fed rate hike demonstrates investor's confidence in economy

The Federal Open Market Committee decided to raise interest rates by 25 basis points yesterday signaling the beginning of a gradual rate tightening policy. Markets across the world reacted positively to the news, U.S. stocks jumped 1.5 percent, European indexes extended their rally as bond yields fell, and both Chinese and Japanese stocks closed with strong gains.

"The worldwide reaction showed investor's confidence in the United States ability to deal with higher borrowing costs in time of tepid inflation. Furthermore, Fed Chair Janet Yellen in her press conference yesterday made note of how the Fed's actions were a vote of confidence and that concerns overseas and in the bond market will have a minimal impact to the health of the U.S. economy", says Voya Global Perspectives.

 

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