History Article
Close
This article was published September 17, 2015 at 20:01.
The last change is the 17 September 2015 at 22:23.
The long-awaited upturn has not arrived. The Federal Reserve has decided to leave unchanged the cost of borrowing at a record low of 0-0.25 percent. The Fed Funds rate, the benchmark interest rates set by the US central bank, are nailed at this level for over six years. The last rate hike was made on 29 June 2006 when the cost of money was taken from 5 to 5.25% seems another geological era.
The FOMC, the Committee decides on policy monetary, precise in the press that “it will be appropriate to raise rates when it will be seen further progress in the labor market and when inflation will be back to its medium-term objective of 2%.” A formula already used in recent months to be suggesting that the Fed is in no hurry to raise the cost of borrowing. The economic outlook, the statement said, are “balanced” but the Committee “is monitoring developments abroad,” a clear reference to the fears of a slowdown of the world economy and in particular in emerging countries.
The decision was taken by an overwhelming majority, with 9 votes in favor and only one against, that of Jeffrey M. Lacker, who would have preferred to raise the cost of money by 25 basis points. Before today, five times in a row the meetings the Fed had seen all agree. Doves, led by President Janet Yellen, have still won clearly.
The immediate reaction of the foreign exchange market, with the euro, reached 1.14 against the dollar, up by more than one percentage point . Sull’obbligazionario, returning purchases on US government securities, with yields on ten-year decline of 10 basis points to 2.19% and the biannual down 13 basis points to 0.68 percent. On the eve of the meeting, the US rate futures showed only a 23% chance of a hike today, a sharp decline from 45% a month ago. They were right.
The Fed also released the new economic forecast: has revised upwards its growth forecasts for the current year but cut those for 2016. For 2015, the US central bank now expects growth gross domestic product to 2.1% (in June had shown a + 1.9%). This year the unemployment rate expected to remain at 5%, less than the 5.3% forecast in June. As for 2016, the Fed cut estimates of GDP to 2.3%, but improved those on unemployment to 4.8 percent. The inflation rate is seen at 1.4% this year instead, to 1.7% in 2016 and 1.9% in 2017, with an upward revision of 0.1% for 2015 and to down 0.1% for the next two years. For another two years short inflation will not touch the 2% set as a goal.
The Governor Janet Yellen, the press conference began at 20:30, explains how the Fed is worried by the latest developments of ‘global economy: “The recovery has progressed enough – he said – there is no reason to raise rates now, and we have discussed it in the light of uncertainties abroad and lower inflation, we decided to wait. The concern for China and the emerging markets resulted in market volatility and, given the significant interconnections between the US and the rest of the world, the situation must be carefully observed. ” The vast majority of members of the US central bank still expects a rate hike later this year, said Yellen, noting, as it did in July, that “the importance of the first increase in interest rates should not It is exaggerated “because” monetary policy should remain very accommodative for some time after the first rise. ” An increase at the next meeting of October 27 to 28 (which is not followed by a press conference), “remains a possibility,” concluded the Yellen.
Fed, outstretched hand to emerging countries (analysis of Riccardo Sorrentino)
© ALL RIGHTS RESERVED
Permalink
No comments:
Post a Comment