Global shares fall on Fed rate hike, UK rate outlook

"The US interest rate hike was already expected both by policymakers and the market", Kim told reporters at a visit to a local IT firm in Seoul.

The Fed raised its rate by a quarter percentage point on Wednesday to one-and-a-quarter-percent citing great progress in the us economy including an increased number of jobs and a drop in the unemployment rate. It also maintained its stance to raise the rate one more time this year and three times next year.

The announcement that the Fed plans to begin paring its balance sheet later this year - "provided that the economy evolves broadly as anticipated" - involves its enormous portfolio of Treasury and mortgage bonds.

Markets in Asia are also cautiously waiting whether China's central bank will follow the Fed with another round of money market rate increases (like it did in March 2017). However, there are temporary concerns over the weak inflation. Lee Ju-yeol, governor of the Bank of Korea, recently hinted at the possibility of an interest rate hike and said, "we may need to adjust the degree of monetary easing". The FTSE 100 appeared on the back foot after those difficulties in foreign markets, also remaining under pressure because of fears that the Brexit deal negotiations are likely to leave the United Kingdom walking away with a less than optimal trade and economic deal.

The central bank's upgraded "dot plot", which maps where central bank officials see rates headed in the future, suggests that another rate hike could be coming later this year. And hiring in the United States remains solid if slowing, with employment at a 16-year-low of 4.3 per cent - even below the level that the Fed associates with full employment. A US government report showed that the consumer-price index in May was up 1.9% on an annualized base, dipping below the Fed's 2% target again. The 10-year U.S. Treasury yield dropped by 8 basis points to 2.13% after briefly touching 2.1% earlier on Wednesday, its lowest level of 2017 (bond prices and yields move inversely).

It expects to begin the normalization of its balance sheet this year, gradually ramping up the pace.

"The Committee now expects to begin implementing a balance sheet normalization program this year, provided that the economy evolves broadly as anticipated", said the Fed in the statement. Inflation was expected to be at 1.7 percent by the end of this year, down from the 1.9 percent previously forecast.

The New Zealand dollar slipped 0.3 percent to $0.7243 after touching a low of $0.7234, moving away from the previous session's four-month high of $0.7319.

Crude oil prices were listless after having slumped almost 4 percent to their lowest close in seven months on Wednesday, on an unexpected large build in gasoline inventories. Benchmark U.S. crude fell another 22 cents to $44.51 a barrel in electronic trading on the New York Mercantile Exchange.

In her press conference after the announcement, Fed Chair Janet Yellen asserted that USA economic growth appears to have rebounded enough to justify both higher rates and a return of Fed-held assets to the wider market.

CURRENCIES: The dollar rose to 109.64 from 109.57 yen.