David Madden, a market analyst at CMC Markets UK, said: "The fall in UK retail sales in May only added to sterling's woes, but the shock that three members of the Bank of England (BoE) voted to increase interest rates jolted the pound higher".
The Fed expects that inflation will not hit the current target, of two percent, and it has revealed plans for unwinding the post-asset purchasing balance sheet, which now totals nearly $4.5 trillion. However, BOK may have to raise its policy rate quickly if capital outflow becomes too rapid.
The Federal Reserve is also likely to raise rates at least one more time this year, unless something unexpected happens to the economy (such as a blowup this year over the debt ceiling).
The U.S. central bank on Wednesday raised the benchmark interest rates for the fourth time since December 2015, and unveiled plans to start trimming its balance sheet.
While some commentators remain convinced the Fed will further increase rates by the end of 2017, others have pointed to worryingly low inflation and a slowdown in wage growth as potential headwinds facing the economy. "But shrinking balance sheet would boost the dollar in the long run", the trader said, noting the Fed's plan to reduce its portfolio would "inevitably" pile pressure on the Chinese yuan.
The 'Lone Star' Tick Can Make People Allergic to Red Meat
The allergy's symptoms include hives and shortness of breath, along with the possibility of an anaphylactic reaction, Saff said. You read that correctly: one bite from the Lone Star Tick, and you could be allergic to meat for the rest of your life.
Those factors mean the Fed's preferred inflation measure will remain below the 2 percent target for some time, but will gradually rise to the target level over "the medium term".
And the most important pillar of the economy - the job market - remains solid if slowing, with unemployment at a 16-year-low of 4.3 percent - even below the level the Fed associates with full employment.
While the territory effectively imports United States monetary policy due to its currency peg, local banks have been reluctant to pass on higher rates to customers amid fierce competition for mortgages - heightening a property boom, as well as fueling depreciation in the Hong Kong dollar.
Frick says the Fed also may be trying to cool off financial markets, particularly the bond market. Those figures would rise in increments over a year until they reached $30 billion a month in Treasurys and $20 billion in mortgage bonds. Fed Chair Janet Yellen said this process could begin "relatively soon". "When taking into account the fundamentals and recent economic indicators, a massive capital flight won't be taking place", she said. The prospect of higher interest rates will increase the opportunity cost of holding gold and had some negative impact on market confidence.
This evening the Central Bureau of Statistics will publish Israel's Consumer Price Index for May with economists expecting that it rose 0.3% over the month.
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