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This article was published September 18, 2015 at 8:29.
The last change is the 18 September 2015 at 08:35.
NEW YORK – The Federal Reserve Janet Yellen does not like surprise yesterday and has lived up to its I think. The leadership of the Central Bank, at the end of two days of meeting, have overwhelmingly decided to leave US interest rates unchanged near zero now since 2008, to combat the new unknowns exploded on the economy and on global markets. With an additional gesture by “dove” concerned about the weaknesses of the expansion, the executive committee of the Fed also reduced forecasts on the path of normalization of monetary policy, while providing even when a mini-close – but only one – by December .
“To support progress toward maximum employment and price stability, the Committee reaffirms that the current federal funds rate between zero and 0.25% remains appropriate,” has said the Central Bank. It will remain so until it will look “further improvements in the labor market and have reasonable confidence that inflation will return to 2% over the medium term.” Today, in fact, warns the FOMC, “the global economic and financial developments may curb the activities and generate additional downward pressure on inflation.” A situation to fight “with an appropriate policy accommodation” in a position to expand the economy “at a moderate pace.” The Fed sees risks now “almost balanced” but is “monitoring the events abroad.” In the subsequent press conference Yellen said that “the economy is going well,” but said that still “low interest rates create jobs.” It has confirmed the extreme attention paid “in China and emerging markets,” betraying fears Beijing’s ability to handle an expected slowdown occurs while an economic rebalancing of the country.
Wall Street, on the alert until the announcement and recovering from weeks of highly volatile, initially breathed a sigh of relief, with stock market indices which gained more than 1%, to close but with Dow Jones and S & amp; P 500 down slightly shaken by fears for the global economy and for an infection in the United States. The ten-year Treasury bonds are leavened pushing yields down to 2.21% from 2.3 percent. And the American currency sold its 1% reaching 1.14 against the euro, to a minimum of three weeks.
The FOMC, marrying a more cautious attitude, lowered to 3.5% from 3.8% long-term target for interbank rates. In future closer waiting for the end of 2015 is 0.375% against 0.625% indicated in June, the end of 2016 to 1.375% against 1.625 percent. Caution is also leaked on the timing of a first intervention: 13 of the 17 members are betting on close by December, but three make it slip to 2016 and one in 2017. A member also asked negative rates. Yellen declined to comment on the press conference about his personal position. In June there were 15 policy makers to a close within the year and two preferred 2016. The performance of the economy, according to the Fed, justifies the approach very gradual rise by 2.1% this year, against ’1.9% expected previously, but only 2.3% in 2016 instead of 2.5 percent. Inflation will stop at 0.4% in 2015 disappointing 0.7% so far expected to rise to 1.7% and 1.9% in the next two years.
The executive committee of the Fed However it is seen emerge a limited internal dissent when voting. After five summits unanimously concluded, it was triggered yesterday’s opposition hawk Jeffrey Lacker, head of the office of Atlanta. But with Janet Yellen, it is important to show leadership in an uncertain juncture, sided with the other nine members with voting rights.
The position, although he denied that the Fed Yellen taking into account the markets, it seemed to meet investors and traders who had seemed increasingly skeptical about the need for an immediate monetary policy tightening. Have spoken out against these days the big names from Lloyd Blankfein of Goldman Sachs, the Oracle of Omaha Warren Buffett. Ray Dalio said that, after a close, the Fed would almost be forced to quickly launch new maneuvers Quantitative easing. “If they had raised rates, would be a bad decision,” said Mark Grant of Southwest Securities. Why? “China, no inflation, employment remains weak,” he rattles off. Some, such as analysis of Deutsche Bank, called upon to eliminate uncertainties, asset bubbles and give confidence to the strength of the recovery. But economic performance reflected the most recent data was not enough to dispel the doubts inside the Fed. The GDP has marched by 3.7% in the second quarter and employment is increasing, with the jobless rate fell to 5, 1%, the lowest for seven years. But stagnating wages and inflation is “dormant” under the target of 2 percent.
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