SINGAPORE (Dec 24): The US Federal Reserve on Dec 19 raised interest rates for the fourth time this year — and the ninth since late 2015 — even as a sense of caution and unease continued to linger across financial markets over the past week. Despite pressure from US President Donald Trump on the Fed to leave rates unchanged, the central bank raised its benchmark interest rate by a quarter of a percentage point, to a range of 2.25% to 2.5%.   

At a press conference, Fed chairman Jerome Powell said the US economy remained strong overall despite the emergence of some “cross-currents”. “Despite this robust economic backdrop and our expectation for healthy growth, we have seen developments that may signal some softening,” he added, suggesting that the pace of rate increases may slow next year.   

On the day of the announcement, the Dow Jones Industrial Average and the Standard & Poor’s 500 fell 1.49% and 1.54% respectively. Hopes for a Santa Claus rally faded as US stocks stayed on course for their biggest December decline since the depths of the Great Depression in 1931. The selling spread into Asian markets on Dec 20, where Japan’s Topix index and the Nikkei 225 slid 2.5% and 2.8%, respectively, and Hong Kong’s Hang Seng Index was down 0.9%. The Shanghai Composite in China was down 0.5%, while both Singapore’s Straits Times Index and Malaysia’s KLCI dipped 0.3%.   

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