The Fed: the global economy slows, “should wait” rate – Il Sole 24 Ore

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This article was published October 8, 2015 at 20:36.
The last change is the 8 October 2015 at 21:01.

The Federal Reserve has decided to raise interest rates at the meeting of the FOMC , the operating arm of the Fed, last September, as the impact of the global economic slowdown has made it “appropriate to wait for” better times, accomplices, while concerns about inflation. This emerges from the minutes of the FOMC regarding the meetings of 16 to 17 December, which shows that several delegates FOMC expressed fears about the impact of slower economic growth in China over the USA, on the strengthening of the dollar, which is quoted as well 25 times in the minute, and the decline in inflation that is expected to below 2% by the end of 2018. Several members of the FOMC, in particular, according to the minutes, “recognized that the recent global economic and financial developments may have increased the risk of a decline of the attivita ‘cheap to some extent “, which also includes the appreciation of the dollar, a drop in exports and inflation.

The minutes also says that, while most of the members of the FOMC expects that “the conditions for political stability are met or will be later this year”, some are not so sure. According to the latter, indicating the minutes, “although it may be near the time of a political normalization would be appropriate to wait to get more information” on the labor market in order to confirm that “the prospects of economic growth are not deteriorated significantly.”

The members of the FOMC, which last September meeting have left unchanged the cost of money in the US near zero, noted that “recent economic developments and financial markets have to some extent hampered the prospects of ‘ economy and exerted new pressure on inflation in the short term. ” The minutes of the meetings of the last month are not also strong disagreements among the members as to the intention not to raise rates. “After evaluating the prospects of economic, labor market and inflation and after assessing the uncertainties related to the outlook, all, except one, have concluded that, although the US economy has been strengthened, the economic conditions do not legitimize an increase in the target range for the Fed funds rate in the encounter “.

The outlook on growth and performance of the labor market remain crucial as a change in the US monetary policy. “Most of the delegates agreed that they will have more ‘confidence that inflation is moving towards the Fed’s target if, as expected, economic activity will continue to expand at a moderate rate and conditions of the labor market will improve further “, add the minutes that some delegates also indicated that their confidence would increase if there was an increase in wages, although this factor is not a precondition for increasing the cost of borrowing.

Thirteen of seventeen FOMC officials said they expected a move on interest rates later this year. Janet Yellen, the Fed’s number one, has indicated in a speech following the meetings of September to be one of the thirteen. (Thomson Financial)

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