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The Week in Numbers: Fed Raises Rates For The Third Time This Year

The United States Federal Reserve raised interest rates by a quarter of a percentage point to a range of 2% to 2.25%. The US central bank foresees one more rate hike in December, three in 2019 and one in 2020. That would ultimately put the benchmark overnight lending rate at 3.4%, around half a percentage point above the Fed’s estimate neutral rate, which is the rate that neither stimulates nor restricts the economy.

The US Treasury yield curve flattened and the US dollar also briefly weakened against a basket of currencies after the news. US bank and financial stocks fell.

The Fed expects the economy to grow at 3.1% this year, with continued growth over the next three years. It is also expecting sustained low unemployment (currently at 3.5%) and stable inflation near its 2% target over the next three years.

Hotpot chain, Haidilao, made its much-anticipated debut on the Hong Kong stock exchange on Wednesday, 26 September. Shares opened at HK$18.80, up from its initial public offering (IPO) price of HK$17.80, which was already at the top end of its range. The company’s management has said that it plans to use the proceeds from the offering to push its global expansion, repay loans and improve food safety technology.

The chain is founder-led by 47-year-old Zhang Yong, who launched the first restaurant in 1994 after working in a tractor factory. His 57.7% stake in the company is valued at US$7 billion after the close on Wednesday. Haidilao currently has 341 restaurants, with 7.3 billion yuan in sales and 647 million yuan in earnings. Shares of the company trade at around 70 times its earnings.

Meanwhile, investors in Singapore are choosing to invest in real estate investment trusts (REITs), rather than property developers. Since the additional property cooling measures were implemented, property stocks have tumbled 5.4%, while REITs are up 0.7%, even as interest rates continue to climb. The Singapore government took steps to cool home prices after they appreciated more than 7% in the first six months of the year.

The founders of Instagram, Kevin Systrom and Mike Krieger, are leaving Facebook Inc, potentially after tensions with chief executive officer Mark Zuckerberg over the direction of the photo-sharing app. The two built Instagram and sold it to Facebook for US$1 billion, six years ago. While Facebook’s reputation has been dragged down this year through privacy breach, fake news and election interference, Instagram’s brand has been left unscathed, with monthly users surpassing one billion.

Meanwhile, Singapore’s August core inflation, which does not include accommodation and private road transport, was 1.9%, the same as July. This was due to food and retail price rise, but slightly offset by moderation in services inflation.

These two months have seen the fastest rate of inflation in four years. The Ministry of Trade and Industry and the Monetary Authority of Singapore said that inflation is likely to rise mildly. Higher oil prices and food commodity prices due to strong demand are global factors that will affect inflation. Domestic sources of inflation include faster pace of wage growth and higher domestic demand. Core inflation is expected to rise over the course of 2018 to average in the upper half of 1% and 2% forecast range. Headline inflation is expected to be between the upper half of 0% and 1% forecast.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has a recommendation on Facebook Inc. Motley Fool Singapore contributor Jeremy Chia owns shares in Facebook Inc.