America’s central bank signals that US interest rates could begin to rise in December after being held at close to zero per cent since 2008

America’s central bank signals that US interest rates could begin to rise in December after being held at close to zero per cent since 2008

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America’s central bank last night signalled that US interest rates could begin to rise in December after being held at close to zero per cent since the height of the financial crisis in 2008.

The latest minutes from the Federal Reserve’s interest rate-setting Open Markets Committee show a solid core of policymakers believe that a rate rise in December is now ‘appropriate’.

In spite of the prospective rise in interest rates, shares on Wall Street continued to rally, with a gain of 1.5 per cent.

Fed policymakers said ‘the US financial system appeared to have weathered the turbulence in global financial markets’. At its last meeting the Fed postponed an earlier rise this autumn because of the turbulence on the Chinese stock market in August.

The hardening of the Fed’s position came as a top Bank of England’s monetary official cautioned that the British bank rate could still rise next year.

Deputy governor Ben Broadbent distanced himself from the recent interpretation of the Bank of England’s Inflation Report, which led to speculation that there would be no rise in the bank rate from its current historically low level of 0.5 per cent until 2017. Broadbent said: ‘Some of the coverage… was just misplaced.’

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The deputy governor’s comments boosted sterling on the foreign exchange markets where it immediately jumped half a cent against the US dollar to $1.52 – its strongest level this week.

In his Lincoln speech in July the governor of the Bank of England Mark Carney sought to prepare the markets for an interest rate rise in 2016, saying it would ‘come into sharper relief around the turn of this year’.

He also made it clear that when rates do start to rise the increases will be gradual in an effort to give some certainty to mortgage borrowers and small businesses.

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