US shares hit record after rate hikes are delayed

THE US stock market roared to a record high yesterday after minutes from the Federal Reserve’s latest meeting showed caution among officials over hiking rates for the second time this year.

In its fifth straight day of gains, the S&P 500 rose by 0.25pc, or 5.97 points to 2404.39, an alltime closing high.

The rise came after minutes from the Fed’s latest meeting showed policymakers want to see proof that the country’s economic slowdown is temporary before increasing interest rates.

They said it would be ‘prudent to await additional evidence that a recent slowdown in the pace of economic activity had been transitory’.

This came as a surprise to markets, which had been trading flat ahead of the minutes. Traders will now be keeping a sharp eye on US economic data released in the weeks ahead of the Fed’s June meeting.

Likewise, the US dollar fell as investors interpreted the Fed’s tone as dovish.

Despite worries, most members of the Federal Open Mar- ket Committee, the body which sets interest rates, still expect to raise rates next month.

Members also bought up a number of concerns about uncertainties stemming from government policy. It came just one day after president Donald Trump unveiled his budget proposals which were criticised for cutting foreign aid and education expenditure.

Nearly all of the policymakers at the meeting, which took place earlier this month, said they were in favour of winding down the Fed’s holdings of Treasure debt and mortgage-backed securities.

They said the approach would be in line with the Fed’s aim to reduce its $4.5trillion balance sheet in a gradual manner.

The Federal Reserve cut rates during the global financial crisis and they have remained at record lows ever since.

The central bank has raised rates just three times since the crisis, most recently increasing them in March this year.