Global interest rates firmly on up - Axa

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US interest rates are likely to go up by 0.25% when the Federal Open Market Committee - the equivalent of the UK's Monetary Policy Committee - next meets on 29 and 30 June, predicts Axa Investment Managers.

The increase will be the first in a series that should see the key federal funds rate hit 4% a year from now, Axa adds – a substantial increase from the current 1% level. Increasing rates is necessary because of building inflationary pressures. Tax-cuts initiated by the Bush administration two years ago are feeding through to help the US economy move towards a 5% annualised rate of GDP growth. Companies are starting to unfreeze their hiring policies, with the result Axa forecasts a 1.5% increase in the employment rate by the end of 2004 compared to the end of 2003. This will help ...

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