Thursday, March 17, 2016

RPT-The Fed keeps rates but provides two increases this year – Boursorama

 The Fed now has two rate  hikes in 2016 * Moderate growth and risks still  present * The markets greet a tone softer (Repeat  without changing a telegram sent Wednesday) by  Howard Schneider and Lindsay Dunsmuir WASHINGTON,  March 17 (Reuters) – the Federal Reserve  held Wednesday its interest rates unchanged, as  expected, but hinted that moderate economic growth  and dynamism of the labor market in the US could  allow it to resume tightening its monetary policy  later in the year. The US central bank, however,  noted that the economy and the market remained  exposed to risks related to global uncertainties,  although new economic projections of its leaders  show they expect two rate hikes by the end of  December. “A series of recent indicators,  including strong employment growth, suggest a  continued improvement in the labor market.  Inflation has risen in recent months,” the  Fed said in a statement, adding the objective of  maintaining rate “fed funds” at 0.25%  -0.50%. “However, the evolution of the  global economic and financial situation continues  to pose risks” and should keep inflation at  a low level this year, she added. The president of  the Fed, Janet Yellen, welcomed the strength of  the US economy in a global context still tense but  said he wanted to wait for a confirmation of the  recent rise in core inflation in the United States  and the pursuit the improvement on the employment  front. “The committee (monetary policy)  deemed it prudent to maintain our position at this  meeting,” she said. The institution  therefore now provides two increases this year  rather than four, which was his goal when it  raised rates for the first time in nearly 10 years  last December. “The decision to keep rates  unchanged reflects the evolution of the global  economy, caution is appropriate,” said Janet  Yellen at the press conference following the  announcement of the decisions of the Monetary  Policy Committee of the Fed. The forecast two  increases this year “reflects the forecast  for global growth and a tightening of credit  conditions,” she added. REVIEW OF GROWTH  FORECAST DOWNWARD “Our first impression is  that the tone seems slightly more flexible  regarding forecasts”, analyzed for its part  economist Tom Porcelli at RBC Capital Markets. The  dollar fell against both the euro and the yen  after the announcement of the Fed’s  decisions. The NYSE, which moved close to balance,  has turned up moderately. The index feature of  Wall Street, the S & amp; P 500 .SPx, took 0.56%  to finish at 2,027.22, its highest level this  year. Sign of a peaceful climate, the CBOE  volatility index .VIX has completed its lowest  level since December. “The market was  expecting two increases to the maximum this year  and the adjustment of forecasts (the Fed) is in  line with expectations,” said Randy  Frederick, director of trading and the derivatives  at Charles Schwab. “So yeah, basically, the  market said it was right.” The Fed had  particularly been cautious in its previous  monetary policy meeting in January amid turmoil in  financial markets, falling prices of oil and  falling inflation expectations. The environment is  now more calm, but the Fed is not getting carried  away, as evidenced by the reduction on Wednesday  its goal of long-term interest rates from 3.5% to  3.3%. The Fed also lowered its growth forecast for  the US economy to 2.2% against 2.4% and its  inflation forecast to 1.2% against 1.6%. However,  it sees prices then rise to approach its  medium-term inflation target of 2%. The central  bank continues to predict that the unemployment  rate this year will fall to 4.7% by the end of the  year and continue to fall the following two years.  The decision to leave rates unchanged was taken  almost unanimously, only the president of the  Kansas City Fed, Esther George, voting in favor of  an increase. * The release of the Fed (Howard  Schneider and Lindsay Dunsmuir; Marc Angrand and  Patrick Vignal for the French service) 

associated value


No comments:

Post a Comment