Kuwait-Mubasher: The US Federal Reserve has ended the ‘era of zero interest rates’ by increasing the Fed funds target range between 0.25% and 0.50%, and the discount rate to 1.0%, with a unanimous vote, according to a report issued by the National Bank of Kuwait (NBK).
“According to the Fed, labor market slack had diminished ‘appreciably’ and the Fed is ‘reasonably confident’ inflation will rise to 2% in the medium term,” noted the report.
The medium long run funds rate is still seen at 3.5%.
“After largely outperforming its peers on Wednesday and Thursday, the USD has reversed part of its gains by the end of the week with the Euro rebounding from the 1.08 level,” said NBK.
The German IFO survey was as uninspiring as the latest Eurozone PMI (ZEW), while the currency ended the week near the low at 1.0870.
NBK noted that UK’s Sterling Pound is ending 2015 at risk of slipping to its lowest level since April.
On the Yen level, in a usual 8 to one vote, the bank kept the size of its QE programme unchanged aiming at an annual expansion of JPY 80 trillion at the meeting that ended Friday, according to NBK’s report.
“Oil dominated the weakness as West Texas Intermediate crude fell below the $35 and Brent below the $38 for the first time since February 2009. Moves in precious metals also caught investors’ attention with gold closing down 1.98%, the biggest daily loss since July at $1066; holding the five-year lows reached briefly earlier this month,” said NBK.
The report said that the USDKWD opened at 0.30365 on Sunday morning.
