Global markets have moved slightly higher as the latest monetary policy statement from the US raised the potential for a December rate hike.
The S&P 500 index gained 1.2 per cent by the end of trading, while the Dow Jones index closed 1.1 per cent higher, after the latest statement from the US Federal Open Market Committee (FOMC) placed less emphasis on global risks to the US economy.
In its statement released last night, the FOMC stated: “Household spending and business fixed investment have been increasing at solid rates in recent months, and the housing sector has improved further,” but added that “it is monitoring global economic and financial developments”.
This is in sharp contrast to its September statement when it warned that “recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term”.
In addition the FOMC made a particular reference to its December meeting raising the prospect of a first rate rise this year.
It noted: “In determining whether it will be appropriate to raise the target range at its next meeting, the committee will assess progress - both realised and expected - toward its objectives of maximum employment and 2 percent inflation.”
Markets outside the US had a mixed reaction to the statement with the Nikkei 225 index closing 0.2 per cent higher, while in early trading Germany’s Dax stayed steady with a 0.03 per cent drop, while the FTSE 100 index slipped 0.9 per cent.
