WASHINGTON (Reuters) – The US Federal Reserve has cleared the way for a rate hike in June freely, but at the same damped expectations for the pace of monetary tightening. As expected by most experts, painted the monetary authorities in the commentary published Wednesday for interest rate decision, the promise to be “patient” with a view to raising interest rates. However, the Fed was skeptical with views on economic growth and inflation. This led to violent reactions in the financial markets.
Fed Chairman Janet Yellen tried at the press conference following the FOMC meeting to dampen expectations for a rate hike, “Even if we have the word deleted patient, we are now not impatient.” An increase in interest rates already at the next meeting in April was unlikely so Yellen. From the next meeting on June 17 rate hikes are “not excluded”. A determination not admit it. In the current session, the central bank kept its key interest further to the zero line. For the past six years is the “Fed Funds Rate” in a range of zero to 0.25 percent.
FINANCIAL DECISIVE
“The pace of rate hikes depends entirely on the economic data from” Yellen said several times. Prerequisite for a first rate hike were further improvements in the labor market and the expectation that they would reach the medium term inflation target of two per cent. At a rate hike pace yourself Yellen did not specify.
The time for a first rate hike is still open on the assessment of Deutsche Bank economists. The experts believe that even a first rate hike in September is likely. Also note that the Fed recently called a weaker export growth point. The situation is different, the research house Capital Economics: “An increase in June is not set in stone, but it would have already done something dramatic that the Fed will change their plans.”
DOLLAR BURDEN – US ECONOMY BUT CONTINUE STRONG
The strong US dollar is likely to dampen export growth and keep inflation remains low, according Yellen. However, they showed little worried. “The economy will continue to grow above trend,” Yellen said. “The strong dollar but it is also a sign of the strength of the US economy.” She also expects a continuation of strong growth in employment.
If the forecasts pace of rate hikes monetary authorities made concessions again. For the end of 2015, the central bankers now expect an average interest rate of only 0.625 percent. In the last forecasts in December this figure was at 1.125 percent. The end of 2016 the base rate (Fed Funds Rate) is expected at 1.875 percent (previously 2.5 percent) are, according to forecasts. For the end of 2017 an interest rate of 3.125 percent is forecast (above 3.625 per cent). In December, the central bankers had lowered their expectations for the pace of monetary tightening. Also in view of economic growth and inflation, the Fed was more skeptical. Finally, a series of economic data had disappointed
In the foreign exchange market, the euro and responded lt;. & Gt EURUS.FX1; with extremely strong gains on subdued interest rate expectations. The price of the common currency rose by about four cents to an intraday high of $ 1.1043. Before the news of the euro was still trading at $ 1.0650. On the New York Stock Exchange, the Dow Jones Industrial & shot lt; DJI.DJI & gt; up and ended trading 1.27 percent higher. The US government bonds deposited. With particularly strong growth in the longer maturities. / Jsl / jkr / he
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