Euro en route to parity with the mighty U.S. dollar

Markets await UK unemployment figures and Federal Reserve meeting – business live

Yields on short-term US debt surged to the highest since 2009, sending the dollar to peaks not seen in nearly 14 years. The Fed also surprised markets with a forecast that showed it could raise rates three times next year, instead of two.

The Federal Reserve's policy makers projected where they thought interest rates would be at the end of next year.

The Bank of England said on Thursday that sterling's strong performance over the past month could soften an expected surge in British inflation next year, as its policymakers voted unanimously to keep interest rates unchanged at a record low 0.25 per cent.

The central bank typically doesn't opine on fiscal policy, though Yellen said government spending is not needed for the economy to reach full employment.

The Fed signaled in a statement Wednesday that additional rate increases will likely be made slowly as the economy improves and inflation edges closer to the Fed's 2 percent target.

Some investment advisers said they wouldn't recommend that clients make big changes in their portfolios despite the Fed's forecast of three more rate hikes next year.

Britain's pound fell 0.7 per cent against the USA currency after the BoE said its inflation target is more attainable than previously predicted. What's even more important here, though, is that we could be on the verge of three more rate hikes in 2017, according to Federal Reserve chair Janet Yellen.

Ripples will be felt by Southern Californians with mortgage loans, home equity loans, student loans and credits cards, as well as those who plan on buying a vehicle or truck in the coming months.

HONG KONG'S FED FOLLOW: The Hong Kong Monetary Authority, the city's de facto central bank, immediately took the Fed's lead and raised its overnight "discount window" lending rate by a quarter point to 1 percent. But rates on some other loans - notably credit cards, home equity loans and adjustable-rate mortgages - will likely rise soon, though only modestly.

"They've already priced in this U.S. Fed increase".

The quarter percentage-point boost will lift the Fed's benchmark federal funds rate from a 0.25 percent to 0.50 percent range to a range of 0.50 percent to 0.75 percent.

Stocks have been on a tear in recent weeks on speculation the incoming Trump Administration will pursue tax cuts and increase infrastructure spending.

The Dow Jones industrial average was up 19.77 points, or 0.1 percent, to 19,872.01, the S&P 500 had lost 2.5 points, or 0.2 percent, to 2,258.31 and the Nasdaq Composite had dropped 7.40 points, or 0.14 percent, to 5,449.46.

Last month after Trump's election, Yellen told a congressional committee that Fed officials would be monitoring Congress' actions and "updating our economic outlook as the policy landscape becomes clearer". "That could surely boost inflation and US bond yields", said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities. “Then they said two, and then by June, it was one, and we just got that one 15 minutes ago.”.

But she stressed that "we are operating under a cloud of uncertainty at the moment and we have time to wait to see what changes occur and to factor those into our decision-making as we attain greater clarity".

In response to a question, Yellen said she plans to serve out her four-year term, which ends in February 2018. "There are many considerations that Congress needs to take account of, and many bases for justifying changing fiscal policy", she added.

The yield on the 10-year Treasury note touched its highest level in more than two years and sat at 2.57 percent late Wednesday, up sharply from 2.47 percent a day earlier.

The central bank kept its long-term estimate for economic growth at 1.8 percent, far below the 4 percent pace that Trump has said he can achieve with his economic program.

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