Fed raises rates for first time since 2018 while Russia faces looming default
Commentary: How high will the Fed have to go?
By Tamim Bayoumi in Washington
On 16 March the Federal Open Markets Committee stuck to its policy of reversing stimulus only slowly in the face of a burst in inflation. The committee raised the target federal funds rate by a quarter of a percentage point and decided to keep its holdings of bonds at their current high levels until at least the next meeting. While the interest rate decision got most of the attention, the decision to maintain bonds at their current levels may be at least as important for future policy.
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Commentary: ‘Fire sale’ as investors scramble for exit from Russian bonds
By Lewis McLellan in London
Default is looming for a country that was once counted among the safest bets in emerging markets. Russia has around $38.5bn of bonds denominated in hard currency. Two had coupons due on 16 March. Investors are scrambling for ways out of the instruments. ‘People are running for the exits,’ said a portfolio manager. ‘Everyone is trying to do similar trades but liquidity is very thin, so prices are very low. It’s a fire sale.’
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