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This article was published on Dec. 17, 2015 at 6:35.
The last change is the December 17, 2015 at 07:53.
NEW YORK – The die is cast: the Federal Reserve has triggered yesterday afternoon, at the end two-day summit meeting, the first rise in US interest rates in almost ten years. Close of a quarter of a point – to 0.25% -0.50% – decided unanimously and that is the end of an era, because it has taken down the cost of borrowing from minimum close to zero where the Fed ‘brought in December 2008 in response to the great financial and economic crisis.
In the course of next year the central bank has said it plans, in a smooth path, four mini-narrow . A wheel came the decision of JP Morgan and Wells Fargo to bring the prime rate from 3.25 to 3.50 percent.
The Fed noted “significant improvements this year in terms of the labor market and has reasonable confidence that inflation will rise in the medium term, towards the target of 2%.” The risks “taking into account the developments in domestic and international outlook appear balanced for both economic activity and for the labor market.” It is expected that the ‘conditions evolve to ensure only gradual increases in rates, “which should still remain” for a time under the prevailing levels in the long run. ” The average forecast of 17 members Fed, unchanged from September, is four increases of a quarter of a point in 2016 that bring the rate to 1.375 percent.
“The economy is doing well and has met the criteria for a rate hike,” said President Janet Yellen during the subsequent press conference, adding that he feared the advent of new risks of recession . The “modest” is pretty close “the end of an era exceptional and reflects the belief that the economy will continue to grow.” Yellen also reminded that “monetary policy will remain accommodative” and that the Fed will closely monitor the data, the weak inflation, attributed primarily to the temporary drop in energy, as well as the remaining weakness in the labor market.
But if the Fed’s path towards the first close, subject to repeated delays, it was not easy, the road of continued normalization of monetary policy appears less fraught with unknowns. The stock market reacted with immediate relief to a choice widely anticipated, with indexes that have excelled by 1.5 percent. “What will really though the Fed in 2016? It is making a mistake? These are the questions to be asked, “says John Bellows, manager of Legg Mason Western Asset. The initial rise brings in this new debate the suggestions offered by Yellen. “I expect at least a further tightening in March, but then the Fed may have to re-examine the strategy and outlook,” continued Bellows. “Overworked to the launch cycle for narrow reverse course lightly,” he explains. And the risks of errors restrictive him seem weak: modest increases “do not threaten disproportionate effects on the economy,” the position accommodative Fed can also count on 4.5 trillion dollars in securities that will keep in the budget and the deleveraging occurred in many areas will cushion any stress. The manager, however, sees the economy still plagued by excessive weakness in perspective, so as to test the flexibility of monetary policy.
Joseph LaVorgna of Deutsche Bank fears horizon dangerous misunderstandings between the Fed and Wall Street . “The distance between the expectations of the markets and central bankers remains wide. The first so far have bet on two narrow next year, the second on four. And the composition of the summit of the Central Bank in 2016 will be rather less accommodating. ” Michael Lake Schroders assumes in turn the specter of tension: “The road to a real rate normalization may present more volatility than is currently envisioned by the Fed and by investors.” That could fall victim to an underestimation of a new risk-rates.
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