US Federal Reserve announces interest rate hike

Global stocks rallied, bolstered by China’s pledge to help stabilize markets and another pullback in oil prices as the US Federal Reserve announced its first interest rate hike since 2018, AFP reported.

Optimism over talks between Russia and Ukraine also buoyed equities, analysts said, even as Ukrainian President Volodymyr Zelensky implored US lawmakers for more help to counter Moscow.

Wall Street stocks capped a banner day for global equities, with the S&P 500 piling on more than two percent as the Fed escalated its battle against the wave of price increases battering the American economy.

The Fed’s first interest rate hike since 2018 marks an effort to counter spiking consumer prices even as Russia’s invasion of Ukraine introduces new uncertainty in an economy battered by supply chain snarls and labor shortages.

Fed Chair Jerome Powell expressed confidence the world’s largest economy could withstand the tightening of monetary policy, even as the central bank trimmed its growth forecast for 2022.

“We’re not going to let high inflation become entrenched. The costs of that would be too high,” Powell told reporters, adding the Fed is committed to using its “powerful tools” to prevent that.

Art Hogan, chief strategist at National Securities, said the Fed’s message was consistent with market expectations, meaning the interest rate hike had already been priced in.

He said markets also continued to gain strength from a significant pullback in oil prices, which had “got ahead of” themselves by surging shortly after Russia invaded Ukraine.

Earlier, Hong Kong’s main equities index closed up more than nine percent after Chinese state media said authorities would maintain capital market stability and adopt measures to handle risks for troubled property developers.