Reality check on higher rates By ALEX BRUMMER

Janet Yellen and members of Federal Reserve’s interest ratesetting group must be breathing a sigh of relief that the careful orchestration of the first increase in nearly a decade was initially absorbed cheerfully by markets.

Shares rallied on both sides of the atlantic but the impact was shortlived. not unexpectedly the dollar has been boosted, particularly against the currencies of natural resource nations.

It is so long since the US has raised rates that people have forgotten that where the Fed treads commercial banks follow.

the result is that major banks led by Wells Fargo and JP Morgan Chase lost no time in raising base rates, on which borrowing costs to consumers and firms are set, to 3.5pc from 3.25pc.

american mortgage borrowers are being advised to move from flexible to fixed rates as soon as possible given the direction of travel signalled by Yellen.

What citizens may also have forgotten is that while banks are always very quick to raise borrowing rates they are much more reluc- tant to increase deposit rates for the thrifty. So it has proved in the US with the banks effectively taking the opportunity to improve the spreads between borrowing charges and deposit rates.

For the uninitiated this has been common practice among the banks and is something to look out for.

Savers always outnumber borrowers and in most UK banks these days there are all kinds of wonderful new current accounts on offer – with discounts on water bills and the like – but standard savings and deposit rates are largely kept hidden because they are shamefully low.

One of the real dangers of the Fed finally moving to raise interest rates has been troubling senior policymakers. Once the novelty has passed, the question then becomes when will the next rate rise occur. In fact this was precisely the conversation at the International Monetary Fund meeting in Lima two months ago when emerging markets were begging the americans for some certainty on rates and Fund officials warned that they should be careful what they wish for.

the more US rates are out of kilter with the rest of the world the more chance there will be for capital flight and deepening liquidity and financing problems across the globe.

Yellen tried to assuage some of this with her promise to keep an eye on international conditions.

But much of the conversation on Wall Street now is focused on how many rises there will be in 2016 with analysts assuming at least three, carrying the key Fed funds rate up to 1.25pc or higher. It is now a question of how high, how quickly.

all of this is going to change the dynamics on Britain’s Monetary Policy Committee despite efforts in the last week to cool the excitement over UK rates. Minouche Shafik, the Bank of england’s deputy governor who watches over markets, says it will ‘tread carefully’ on rate rises until wage growth picks up.

History states, however, that since 1997 – when the Bank became independent – it has generally been a follower of the Fed. the american change is likely to hurry Mark Carney and the Old Lady along.

It might be a good new Year’s resolution for UK homeowners to fix mortgage rates now, before the best deals vanish.

Astra overdose

IS Pascal Soriot starting to panic? the astraZeneca chief executive fought a brave battle to keep Pfizer at bay in the spring of 2014 with bold promises to nearly double sales to $45bn (£30bn) by 2023.

But with two of its biggest selling compounds, cholesterol fighter Crestor and heart drug nexium, due to lose patent protection, its promised harvest of new immunology treatments for cancer may not be coming through fast enough.

that looks to have driven aZ into making rapid fire acquisitions, snapping up a 55pc stake in acerta. It holds the formula for acalabruti- nib, a promising new treatment for blood cancers that has the potential for blockbuster sales.

It also has recently added ZS Pharmaceuticals, which treats high potassium levels, and takeda’s respiratory remedies to its portfolios.

Bolt-on acquisitions are no bad thing in an industry where R&D costs are soaring. But investors rightly will be watching to make sure that in seeking to reach an ambitious target too much value is not given away.

Lagarde lament

GeORGe Osborne was first off the mark in supporting Christine Lagarde for another term as managing director of the IMF, when the job comes up for re-appointment next year.

that may not look quite as smart now that she has been ordered to stand trial for alleged negligence over a €400m payment to French businessman Bernard tapie.

Her problems may not be as toxic as the unproven sexual allegations brought against predecessor Dominque Strauss- Kahn. But the uncertainty doesn’t sit well with the IMF’s reputation as an upholder of integrity in finance.