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Federal Reserve's steady rates trigger global market downturn
Editor
Published Sep 21, 2023 02:41AM ET
© Pavlo Gonchar / SOPA Images/Sipa via Reuters Connect
The Federal Reserve's decision to maintain higher interest rates has triggered a drop in Asian and U.S. stock markets on Thursday. This decision has also led to a surge in the U.S. dollar value.
Major indices in Japan, South Korea, and Australia experienced declines following the announcement. Japan's Nikkei 225 fell 0.79% to 32,761.51, and the Topix index dropped 0.4% to 2,396.53. The Kospi index in South Korea decreased by 1.19% to 2,529.68, while Australia's S&P/ASX 200 saw a 0.79% decrease, ending at 7,106.60.
U.S stocks also faced a downturn despite the Federal Reserve maintaining key interest rates as previously anticipated while adjusting economic projections upwards. The Dow Jones Industrial Average fell by 76.85 points or 0.22%, landing at 34,440.88, while the S&P 500 lost 41.75 points or 0.94%, settling at 4,402.2. The Nasdaq Composite saw a decline of 209.06 points or 1.53%, ending at 13,469.13.
The Federal Reserve has kept its target range steady at between 5.25% and 5.5%. Updated quarterly projections reveal that most officials are in favor of an additional rate hike in 2023, implying a potential reduction in monetary easing next year.
Despite the stability in rates, the Federal Reserve's projections suggest a possible rate hike of 25 basis points later this year and a subsequent rate cut of 50 basis points next year. Core inflation remains above the target of 2%, even though it is moderating, with expectations for the end of the year standing at 3.3%.
The impact of these changes was also reflected across Sensex, Nifty, BSE, NSE, and other Indian stock markets on the same day.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
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