Shares were mostly higher in Asia on Thursday after the Federal Reserve ratcheted up its campaign against surging inflation by raising its key interest rate three-quarters of a point.
Hong Kong's benchmark Hang Seng index slipped 0.6% to 20,554.09 after the territory's Monetary Authority matched the Fed's 0.75 percentage point rate hike with one of its own. The HKMA aligns its policies with U.S. monetary moves to keep the Hong Kong dollar at a stable rate with the U.S. dollar.
“While a concrete decision on tariff relief is not expected from the meeting, any indications of willingness in working toward that is an added positive for markets," Jun Rong Yeap of IG said in a commentary. On Wall Street investors welcomed the Fed's widely expected move — which took its key interest rate to its highest level since 2018 — with a broad rally on Wednesday.
Bond yields turned broadly lower following the Fed's announcement. The two-year Treasury yield, which tends to move with expectations for the Fed, fell to 2.98% from 3.06% late Tuesday. The 10-year yield, which influences mortgage rates, fell to 2.78% from 2.79%. “We continue to expect core inflation to push the Fed to hike more aggressively than they or markets anticipate,” the analysts wrote, noting they expect the Fed will announce another three-quarter point increase at its September policy meeting, with further rate hikes continuing into early 2023.
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