With their rise in interest rates?
The global stock market has been in turmoil in recent months, and it’s been dubbed as the worst start to a new year for global economies, ever! Mark Carney, governor of Bank of England (BoE), communicated that the decision for the Federal Reserve to increase the interest rate after seven years at virtually zero, has played a part in significant falls in stock values, however, Mr Carney stresses, it isn’t the sole cause.
Spurring the turmoil
BoE’s Mark Carney has held the Federal Reserve (FR) as “partly” responsible for the further falls in global stocks in the month of January 2016.
In December, the FR increased it’s interest rate after a seven year low, causing investors around the globe to rethink their stocks and shares investments, further adding to the turbulent market conditions.
However, despite this being a “contributing factor”, Carney indicated that a steep re-pricing of assets and, the knock-on effect of the economic crisis in China, were in fact the root causes to the recent effects on the global stock markets.
It came out during his announcement that the Financial Policy Committee (FPC) had suspected the rate rise by the Fed in 2015 would cause wider issues for worldwide economies.
“…the start of the tightening of US monetary policy could lead to a tightening of global financial conditions, particularly for emerging economies, and could accelerate weakness…” Mr Carney
What about a UK interest rate rise?
Mr Carney also made reference to the potential of a UK interest rate rise, to which he feels conditions are still not suitable for this to happen and make a positive impact on the UK economy.
Carney also communicated that the BoE and FPC are ready to release measures to protect the financial stability of the UK should the vote depict they leave the European Union.
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