European Stocks Decline as Traders Assess US Growth Prospects

A weak report on retail sales sent bond yields lower and high-dividend stocks like utilities and real estate companies higher. (AP

Federal Reserve policymakers have raised their target for the benchmark federal funds interest rate by a quarter-point, to a range of 1 percent to 1.25 percent.

The revision came just after the Fed raised interest rates Wednesday for the 2nd time in 3 months and said it would begin cutting its holdings of bonds and other securities this year, signaling its confidence in a growing U.S. economy and strengthening job market.

In its statement following a two-day meeting, the Fed's policy-setting committee indicated the economy had been expanding moderately, the labor market continued to strengthen and a recent softening in inflation was seen as transitory.

The implementation of its proposed balance sheet normalisation programme – a gradual reduction in Fed's holding of securities - this year, would also depend on how the economy evolves, it added. Earlier on Wednesday, the Labor Department reported consumer prices unexpectedly fell in May, the second drop in three months.

The statement also said inflation "has declined recently" and in the next 12 months "is expected to remain somewhat below 2 per cent in the near term".

The shekel continues strengthening against the dollar and against the euro today despite last night's decision by the US Federal Reserve to raise interest rates.

It expects to begin the normalization of its balance sheet this year, gradually ramping up the pace.

More news: Japan's exports post biggest jump since 2015

The US Dollar edged higher as investors pin their collective hopes on another rate increase from the Federal Reserve.

Chris Low of FTN FINANCIAL said the Fed "compromised" by continuing the rate increases despite falling inflation, but "the market expects the Fed to take a break".

Data showed that New Zealand's economy grew 0.5 percent in the three months to March, lower than the 0.7 percent growth forecast in a Reuters poll and well below the central bank's forecast for 0.9 percent growth.

TOKYO (AP) - Shares fell in Europe and Asia on Thursday after the U.S. Federal Reserve pushed ahead with its latest interest rate hike.

Consensus suggests that there will be a third rate hike this year, but Fidelity International global economist Anna Stupnytska is not so sure. Now 17 of 23 now forecast a rate increase in December, compared with seven of 18 in the previous poll.

As per data made available, the previous rate hike by the USA central bank in May had a 0.77 per cent upward impact on the BSE Sensex, while the decision to hold rates in March was impacted by 0.64 per cent.

The tightened monetary policy had a moderate effect on Wall Street, with the Nasdaq Composite and the Dow Jones falling by 0.41% and 0.10% respectively upon market closure.

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