The U.S. Federal Reserve raised interest rates for the first time since July 2023, signaling that another hike could follow as part of its fight against inflation. This move is pushing the dollar higher while putting downward pressure on other currencies, particularly the Japanese yen, and reducing other central banks’ room to ease monetary policy. Higher U.S. rates are also supporting bond yields, making fixed-income assets more competitive relative to equities and increasing companies’ financing costs. Several major developed-market central banks, including the European Central Bank and the Bank of Japan, are following the Fed’s lead. However, the resilient U.S. economy could support global trade flows and corporate activity, particularly in Asia.
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