US Federal Reserve hikes rates 0.75%

Equity markets in the US rallied sharply yesterday as the US Federal Reserve (the Fed) increased interest rates by 0.75% (now to a range of 2.25% to 2.5%) and suggested that future rate rises could slow after September. Government bond prices ended the day flat, however, as uncertainty remains high as to the global economic outlook and thus remains skepticism that the Fed will be able to slow its aggressive rate hiking trajectory this quickly. Given the International Monetary Fund (IMF) slashed global growth forecasts previously in the week, the Fed has admitted it will remain ready to react to the economic data, despite their current outlook.