US unemployment fall fuels rate-rise expectations

A drop in US unemployment combined with rising wages have fuelled expectations of another interest-rate rise by the US Federal Reserve at its next meeting in March.

Ben Bernanke took over from long-serving US Federal Reserve Chairman Alan Greenspan On February 1.

Rates, currently at 4.5%, could rise another two times this year by 25 basis points each to reach 5% by year-end, some analysts are predicting.

Expectations that rates would rise come from recent statistics. The unemployment rate in January, at 4.7%, was the lowest since July 2001, while wages increased 3.3% year on year.

US equity markets fell on the news, since further interest rate increases are expected to have an impact on consumer spending.

The S&P 500 and Dow slipped 0.5% each to 1,264.03 and 10,793.62 respectively.

The tech-laden Nasdaq dropped 0.8% to 2,262.58.