“The decision to raise rates doesn’t signal the beginning of ‘tight’ monetary policy from the Federal Reserve, but it does mark another step towards normalisation, as well as confidence in the long-term recovery of the economy,” she said.
But there were signs some economists think the Fed is miscalculating. Fidelity’s chief economist Anna Stupnytska Tweeted the Fed was “completely ignoring” the data and dubbed the hawkish statement as “quite incredible”.
The Share Centre has this week published research highlighting two US equity funds it recommends for those investors who think the US economy will continue to strengthen, and who want to take advantage of any potential volatility.
“Whether you like or loathe Donald Trump, his election has been taken as a signal by the market that it’s time to get back to normal – meaning that it’s time to cut the economy’s dependence on ultra-low interest rates, as we’ve seen this week,” said researcher Sheridan Adnams.
“Rate hikes are likely to prove uncomfortable for markets and increase volatility as they adjust to the change of course. With US indices currently trading at a high level, a pull-back could finally be on the cards as technically valuations look stretched, and this latest rate rise will add to the stretched valuations.
“However as this adjustment takes place opportunities, and the positive sentiment toward growth, are likely to be supported by fiscal policy announcements and tax credits extending the current cycle out further.”
Its two highlighted funds were Jenny Jones’s Schroder US Mid-Cap and the CF Miton US Opportunities Fund.
They may well be outstanding funds, but if the data keeps on falling and the Fed and other central banks keep on tightening then markets can only go one way.
