Asian markets down on Fed comments

Asian markets were down across the board today (March 20th) on the back of the latest suggestion interest rates could soon be increased in the US.

After chair of the Federal Reserve Janet Yellen stated that rates might be put up by the body next year, markets such as the Nikkei were down.

Ms Yellen took over as chair of the Fed towards the end of last year, replacing Ben Bernanke in the role. She was the preferred candidate of US president Barack Obama to take the leadership of the body.

The Fed has continued to wind down its bond-buying programme and Ms Yellen suggested interest rates could be increased from zero per cent six months after that scheme has come to an end.

Markets down

These comments from the Fed's chair hurt Asian markets, with the Nikkei down by 1.65 per cent over the course of the session following her press conference. Hong Kong's Hang Seng and the Shanghai Composite were also down on the back of Ms Yellen's statement, with each suffering from a loss of more than one per cent.

Peter Redward, of Redward Associates, suggested that the impact of an increase to US interest rates is not going to be the same in Asia as it will be in some of the world's emerging markets.

"We're going to see the type of reaction we've seen in other emerging markets which means interest rates are probably going to climb as well," he told the BBC, suggesting the first Asian country to increase interest rates could be the Philippines.

Mr Redward added: "The issue for Asia is that the US isn't the locomotive for this region that it once was. The rise of China and the relative decline of the US means that it just isn't going to pull the region forward like it has in the past."

A rise in US interest rates could put pressure on the Bank of England's Monetary Policy Committee to increase the UK's base rate, which has stood at a record low of 0.5 per cent for the last five years.

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