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Fed tightening pace could pose dilemma for other central banks

Published 16/03/2017, 15:04
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Investing.com - The U.S. Federal Reserve's tightening path could put pressure on other central banks to take their foot off the easing pedal, according to analysts.
The Fed on Wednesday hiked interest rates to 1%, as expected.
The Fed was relatively cautious, signaling two more rate hikes this year when some market participants were betting on three.
Analysts said one of the reasons the Fed opted to stick to a "gradual" tightening pattern may have been concerns about the impact on the global economy and financial markets of a faster pace.
Wide interest rate differentials with the U.S. could disrupt financial markets and put a damper on global growth, particularly in emerging markets.
The People's Bank of China Thursday lifted bank borrowing costs after the Fed move.
China has been trying to prop up the yuan and stem capital outflows.
Bank of Japan Governor Haruhiko Kuroda indicated Thursday the bank would not allow itself to be pressured into raising its 10-year bond yield target of near zero before the Japanese economy is on a sounder footing.
The BoJ kept monetary policy on hold on Thursday, underlining the diverging monetary policy paths of major central banks.
The Bank of England also kept rates on hold on Thursday as its juggles rising inflation with some signs of weakness in the U.K. economy ahead of talks for Britain to leave the European Union.

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