gpolit.com
gpolit.com May 24, 2018


US Federal Reserve Keeps Interest Rates Unchanged at 1.5 - 1.75 Range

03 May 2018, 01:40 | Kenneth Drake

US Federal Reserve Keeps Interest Rates Unchanged at 1.5 - 1.75 Range

US Federal Reserve Keeps Interest Rates Unchanged at 1.5 - 1.75 Range

"The Fed sees little reason to be concerned with inflation marginally above its 2.0 percent target, particularly after such a long period of underperformance". It downplayed a recent slowdown in economic and job growth, saying the activity had been expanding at a moderate rate and job gains, on average, had been strong in recent months.

The change in the central bank's rhetoric is very important because 2 percent inflation is the Fed's mandate and a healthy enough level to warrant more frequent rate hikes. Experts say the two-percent target is symmetric, meaning it would be equally problematic if inflation lingers too far above or below that level. Investors had all but ruled out another increase at this week's meeting.

"Officials are implicitly endorsing the high probability of another rate hike in June being priced into markets", writes High Frequency Economics' Jim O'Sullivan.

The U.S. central bank kept the interest rates unchanged on Wednesday after concluding its two-day monetary policy meeting, in line with market expectations.

"The market is also probably pretty long (dollar/yen) now", Horchani said, adding that the dollar could face some downside risk against the yen, if USA equities come under pressure on Thursday. However, there were some notable changes in the language of the statement. In its March statement, the Fed indicated business investment had "moderated" from a strong fourth quarter. It added that risks to the outlook appear roughly balanced, removing a previous reference to "near-term risks".

The Fed is widely expected to raise interest rates next month as inflation continues to gather speed.

But data released on Monday showed price gains are now effectively at the Fed's target.

It wasn't clear to what extent the Fed's statement contributed to the pullback, though the prospect of an accelerated pace of rate increases could eventually weigh down a stock market that has always been supported by ultra-low rates. Still, there are enough factors (such as the Fed's looming June rate hike, improving US economic conditions, and rising US 10-year treasury yields) as well as uncertainty (primarily trade talks between US-China) to support the US dollar.

Expectations of faster-than-expected rate rises in the USA, as well as a rapid covering of positions by investors short on the dollar, has sent the greenback to its strongest level since mid-January. Fed policymakers had flagged the potential negative impact of the conflict in recent public comments, but adopted a wait-and-see attitude.

Federal Reserve officials left interest rates unchanged, acknowledging inflation is close to target without indicating any intention to veer from their gradual tightening of monetary policy.

The U.S. Federal Reserve raised interest rates on Wednesday for the second time.



Other News

Trending Now

Constable candidates labelled with caste tags insult to SC/STs: Ramdas Athawale
The shocking incident came to light from Madhya Pradesh where a recruitment has been done on the basis of castes. In the image, candidates could be seen standing with their castes being marked on chest.

Lewis Hamilton: Valtteri Bottas deserved to win in Azerbaijan
Neither auto was able to rejoin the race. "I would have loved to attack a bit more but let's be happy with a point on the board". Hamilton eventually was told to finally box at Lap 22 and came out ahead of Verstappen taking P3 behind his team mate Bottas.

No Wedding Cards For Sonam Kapoor And Anand Ahuja, Details Inside!
All close friends and family members are now prepping up for the grand sangeet ceremony which Farah Khan is choreographing. There are also expectations that KJo may even perform his favourite dance on Radha...from Student Of The Year.

White House Chief of Staff denies from allegations calling Trump an "Idiot"
And Kelly suffered a significant hit for mishandling the firing of a senior White House aide accused of assault by his former wives.

Ruling party in Armenia withdraws from PM race
If HHK abstains from the vote on May 1 then no one will be elected leaving HHK Acting Prime Minister Karen Karepetyan in charge. Pashinyan , a former journalist turned lawmaker, has said parliament must elect him prime minister on Tuesday when it votes.

The 2018 NHL Draft Lottery Results
WBFO's Mark Scott talks with our Sabres analyst Bill Hoppe about this potentially monumental weekend in Buffalo sports history. The remaining order for the first round's picks will be determined as the Stanley Cup playoffs progress.

Captain Iniesta to leave Barca at the end of the season
We're one step away from winning the league, which would complete the double, Then there's the World Cup [with Spain]. He would not be short of suitors this summer among the world's elite clubs but Iniesta said he will leave Europe.

Rodgers feels for Murty over rumours of Gerrard move
"It is hard to see a point in the near future where Celtic will be knocked off their perch but I would imagine Stevie would get assurances from Rangers that he would be allowed to develop".

Fortnite: Battle Royale season 4 skins and Battle Passes
Further, the post says that the comet has left a mark on the island and players would find glowing rocks nearby. For example, there are new Point of Interests and locations to explore in the wake of the meteor shower.

Trump Slams 'Witch Hunt' Russia Probe After Intel Report
The report's conclusion is being opposed by Democrats, who say the committee did not do enough to support its finding. The panel also found that Russians leveraged social media in the U.S.to sow discord during the campaign.