Asian Markets Lower After Hawkish Fed, Fresh Trade War Fears
After a keenly watched meeting, the US central bank lifted borrowing costs, as expected, but indicated another two this year and four in 2019 as the world's top economy continues to improve and inflation picks up.
While the Fed had earlier been tipped to announce three increases each year, there had been growing speculation that it would have to be more aggressive to keep a lid on prices and prevent the economy from boiling over.
Policymakers have been forced to change tack to take account of Trump's huge tax cuts in December, which have already started to take effect.
But in a statement they stressed that rising rates were unlikely to hit the economy, which Fed chief Jerome Powell said was "in great shape".
All three main indexes on Wall Street ended down on the prospect of higher borrowing costs, which would affect investment, while the dollar was slightly weaker as traders had largely priced in further hikes.
And Asian markets struggled, with signs of a slowdown in Chinese growth also denting sentiment after data showed factor output, retail sales and investment all missing forecasts.
Hong Kong ended down 0.9 per cent. The city's de facto central bank lifted its own interest rates to keep in line with the Fed. The HKMA and US central bank's monetary policies are linked owing to their currency peg.
Shanghai lost 0.2 per cent, with analysts saying a People's Bank of China decision not to follow the Fed's rate rise indicated officials may be changing policy to combat slowing growth.
The central bank usually tracks US hikes by lifting the amount it charges to lend to banks in order to prevent a flood of cash from the mainland into dollar investments.
While the Fed had earlier been tipped to announce three increases each year, there had been growing speculation that it would have to be more aggressive to keep a lid on prices and prevent the economy from boiling over.
Policymakers have been forced to change tack to take account of Trump's huge tax cuts in December, which have already started to take effect.
But in a statement they stressed that rising rates were unlikely to hit the economy, which Fed chief Jerome Powell said was "in great shape".
All three main indexes on Wall Street ended down on the prospect of higher borrowing costs, which would affect investment, while the dollar was slightly weaker as traders had largely priced in further hikes.
And Asian markets struggled, with signs of a slowdown in Chinese growth also denting sentiment after data showed factor output, retail sales and investment all missing forecasts.
Hong Kong ended down 0.9 per cent. The city's de facto central bank lifted its own interest rates to keep in line with the Fed. The HKMA and US central bank's monetary policies are linked owing to their currency peg.
Shanghai lost 0.2 per cent, with analysts saying a People's Bank of China decision not to follow the Fed's rate rise indicated officials may be changing policy to combat slowing growth.
The central bank usually tracks US hikes by lifting the amount it charges to lend to banks in order to prevent a flood of cash from the mainland into dollar investments.