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Emerging Markets Move Higher as The Fed Raises Rates

unprecedented moves positively received across the world

Zero-interest-rate policy in the U.S. is finally over. The Federal Reserve moved to increase interest rates for the first time since June, 2006. The decision to hike rates by 25 basis points was described as ‘historic’ and ‘unprecedented’ across media outlets, and was reached by a unanimous vote of 10 to 0. )% interest rate policy is a valuable tool for governments to spur on economic activity, and after the great recessions, governments needed to take unconventional measures to promote recovery.Given current economic conditions, the central bank said interest rates are only likely to increase in a ‘gradual’ manner, ending up at a long-run target of 3.5%. Continuing, the Fed noted it will “carefully monitor” actual inflation “in light of the current 2 percent shortfall”. In a later address, Federal Reserve Chair, Janet Yellen, pointed out that monetary policy is still “accommodative” and that there is room for improvement in the U.S. labour market. Major stock-market indexes across the globe traded higher for the day, indicating that the news was positively received and generally priced in, particularly in Europe and Asia whose markets were closed at the time of the announcement. The U.S. central bank’s dovish stance is viewed as a boon for emerging markets, as a modest uptick in rates allows governments and companies that have borrowed in dollars over the past few years to adjust steadily, whereas more hawkish rhetoric would have been deemed more detrimental. Right now is a better time than ever in recent memory to get involved in emerging markets around the world as interest rates are rising only steadily. Excel Funds is your gateway to emerging markets around the world, and with our Excel Emerging Markets Fund, you can be sure that your money is put to good use. .

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