Fed raises, RBA holds

The Federal Open Market Committee raised its target for the federal funds rate yesterday by 25 basis points to 3 percent. While acknowledging that inflation pressure has "picked up in recent months", it also noted that "spending growth has slowed somewhat" and that underlying inflation remains "contained", so "policy accommodation can be removed at a pace that is likely to be measured".

Today, the Reserve Bank of Australia announced that it is leaving its cash rate target unchanged at 5.5 percent, as widely expected.

In other economic news, the US Commerce Department yesterday released its manufacturing report showing that new orders for manufactured goods in March increased 0.1 percent, reversing a 0.5 percent decrease in February. New orders for manufactured durable goods in March decreased 2.3 percent, revised from the previously published 2.8 percent decrease. New orders for February were reported to have decreased 0.1 percent. New orders for manufactured nondurable goods increased 2.8 percent in March. Shipments increased 1.3 percent, unfilled orders decreased 0.3 percent while inventories increased 0.6 percent.

The UK was hit by a double-dose of bad news yesterday. The Chartered Institute of Purchasing and Supply/NTC Research reported that its purchasing managers' index fell to 49.5 last month -- its lowest reading since June 2003 -- from 51.6 in March, while the Confederation of British Industry's April survey showed that retail sales fell at their sharpest pace since July 1992.