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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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Fed hints at interest rates rise

Article By: ,  Financial Analyst
March 20, 2014 10:15 AM

US interest rates could increase soon after the Federal Reserve hinted it is considering a change to monetary policy in the coming months.

Chair of the Fed Janet Yellen stated that interest rates could start to go up in the US as early as next year. Ms Yellen, who was the preferred candidate of president Barack Obama, took over the role from Ben Bernanke towards the end of 2013.

At a press conference, Ms Yellen said: "This is the kind of term it's hard to define. Probably means something on the order of six months, or that type of thing."

Ms Yellen made her comments to reporters shortly after it was announced that the Fed said it is going to scale back bond purchases by a further $10 billion (£6 billion) per month. This means it is now three times in a row that the central bank has tightened its stimulus efforts.

Date of rate change

Bond purchases are now expected to end later this year, which would imply rate increases will start to take place at around April 2015.

Overnight interest rates in the US were lowered by the Fed to zero per cent in December 2008, a move which was a response to the global financial crash, which damaged the US economy.

Mr Obama has overseen a recovery in the country's financial situation in the last few years, but Ms Yellen will now be looking to increase the pace of growth, while making sure it remains at a responsible and sustainable level.

In a statement released to announce its latest policy decision earlier in the month, the Fed said: "This assessment will take into account a wide range of information, including measures of labour market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments."

While the US looks set to increase interest rates sooner rather than later, the base rate in the UK remains at a record low of 0.5 per cent, as it has for the last five years. However, the Bank of England's Monetary Policy Committee is reported to be mulling over a rate rise in the near future.

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