Fed patient in increasing rates, towards the close in 2015 – The Messenger

The Fed will be “patient” in deciding when to raise interest rates, which could go up to the middle of next year, although less than previously expected. At the end of 2015, in fact, should settle all’1-1,125%, below dell’1,25-1,5% forecast in September.

“Nothing is default. But the patient approach indicates that there should be a normalization in the next two meetings, “says the chairman of the Fed, Janet Yellen, noting that” almost all members of the Fed expect a rate hike in 2015 “. Much depends on the data and inflation, which continues to remain below the target of 2% and on which weighs the decline in oil prices.

The decline in oil prices “will have a positive impact on ‘economy’: the cheapest energy is like – highlights Yellen – is like a tax cut that helps consumers. The Fed – as expected – removes the final statement the phrase “considerable period of time” before starting to raise rates, statement interpreted as six months. But – precise Yellen – the change of language does not translate into a change of policy. “We believe we can be patient to begin to normalize monetary policy. And this is in line with previous statements, “it said in a note. A change of language that has divided the Fed, with seven members of the FOMC who approved the amendment and three who were opposed.

The opening to a rate increase is tied to the US recovery, which proceed even though there are some unknowns, such as inflation, fell in November by 0.3%, the biggest drop since December 2008. The Fed believes that the effect of oil on inflation will be temporary but revises downward the estimated price consumption in 2015 all’1,0-1,6%. “We continue to closely monitor developments in prices.”

The Fed Chairman then said that the entire Board of the US central bank, has discussed the economic crisis in Russia and, after careful consideration, has defendant of his little impact on the US economy.

“We discussed what are the potential consequences for the United States, which could occur either through the commercial and financial ties, which, however, are relatively small,” explained Yellen. “The exposure of US banks to Russian residents is very small relative to their capital,” he continued. “As for the wallets of Americans is true that there are securities and investments in Russia, but also in this case represent a very small share.”

The financial markets in Russia have already exploded and the US sanctions and European tax in Moscow, together with other variables such as the incisive decline in crude oil prices, drives up the concerns for unforeseen consequences, borrowed from other economies, that could harm the United States. Evident, even here, the reference to Russia. The ruble has been decimated, and oil prices are literally collapsed, going from over $ 100 of 19 June, up to pierce the $ 60 a barrel. This has led the Russian central bank to raise interest rates to 17%, helping the currency.