The Federal Reserve has increased interest rates in the US by 0.25% bringing some much needed Christmas cheer for savers and perhaps signalling to other national banks to follow suit.
In adjusting rates to 0.5% (from the historic low of 0.25%) the Fed said that the decision was based on the economy “expanding at a moderate pace”, with spending and investment increasing at “solid rates” and an improved housing sector.
In the UK, the question is thought to be when rather than if the Bank of England will raise rates.
Governor Mark Carney has remained tight lipped saying only that interest rates in the UK will remain ‘low for long’ and that any increase will be ‘limited and gradual’.
Historically, US and UK market interest rates, as measured by government bond yields, have moved in tandem and he UK’s economic recovery is said to be well on track, with solid growth and a strong labour market.