BLOG SURF: US interest rate

Asian currencies have been under pressure recently from an expectation that US Federal Reserve (Fed) will raise interest rates this month.

The Fed has kept the target range for its federal funds rate steady at 0.5-0.75% since its last hike in December. Rates have been expected to rise since the Fed began winding down its bond purchase program, widely known as ‘quantitative easing’ in December 2013, and after the Fed raised its federal funds rate in December 2015—the first time it had done so since the 2008 global financial crisis.

But the Fed’s interest rate moves have been much more gradual, and often delayed, reflecting various concerns about global financial market conditions, including the impact of Brexit and increased policy uncertainty.

Additionally, there has been mixed economic data in the US. A tightening cycle in the US monetary policy is typically bad news for emerging Asian economies.