SGD, STI Recover from Rate Hike Dip as US Fed Raises Interest Rates
The Singapore dollar and Straits Times Index (STI) recovered from an initial dip following the US Federal Reserve's rate hike on September 16.
The Fed raised its benchmark overnight interest rate by 25 basis points to a range of 3.75% to 4%, its first increase since July 2023, and indicated that another round of hikes in 2026 is to come.
Price pressures have remained elevated amid US President Donald Trump's global tariffs, an energy shock following the outbreak of the US-Israeli war with Iran, and heavy capital spending driven by the artificial intelligence boom. US inflation stood at 3.4% in August, above the Fed's preferred rate of 2%.
During a news conference, Fed chairman Kevin Warsh said inflation has been 'too high... for too long'. The Federal Open Market Committee stated that 'today's policy action will support a timelier return to the committee's 2% goal. The committee will deliver price stability.'