The Monday note - 18 June 2018

• The FTSE 100 closed on Friday at 7,633.9, which was down 32 points on a week ago, as concerns over US tariffs weighed on investor sentiment. The ten year Gilt yield stood at 1.31%. 
• The US Federal Reserve raised its policy interest rate by 25 bps to 2.00%, and indicated another two increases will probably follow this year. The central bank also dropped a pledge to keep rates below long-term average levels. 
• The ECB left rates unchanged, but announced plans to taper down its quantitative easing (QE) purchases from September. The Eurozone’s QE programme is now scheduled to end in December. 
• Elon Musk’s The Boring Company has won a contract to build a high speed underground railway connecting Chicago’s O’Hare airport to the city’s downtown. 

Chief Economist comments: 

The Fed last week raised rates again, and the ECB signalled its intention to begin tightening policy. This will prompt the Bank of England to look again at a rate hike – perhaps in August – as the pound could come under downwards pressure otherwise. UK inflation is not particularly high, but another fall for sterling would soon change that. Investors will be looking for higher yielding assets, which the property market can deliver.