The Federal Reserve (Fed, central bank) US remained unchanged on Wednesday benchmark rates as expected by the markets and sharply reduced projection half of the same year end, invoking the “risks” arising from the global economic situation.
most of the Monetary Policy Committee (FOMC) decided at the end of a two-day meeting in Washington maintain current rates between 0.25% and 0.50% -the same level of last December. The main reason cited are the “risks”
This would correspond to only two rate hikes of 0.25 basis points to four, according to the previous estimate.
“The global economic and financial situation continues to present risks,” wrote the members of the FOMC said in the statement, a new terminology reflects a concern exhibited since the meeting in late January.
“While financial conditions have improved recently, economic growth abroad appears milder than expected,” said Fed president Janet Yellen, in a press conference.
The Federal Reserve has opted for a wait at a time when its Japanese and European counterparts especially reinforce its monetary policy to support a sluggish economic activity.
“It is natural that there are differences between our monetary policy “given the best growth in the United States and” its greatest success “at the level of the labor market, estimated Yellen
Asked about the negative rates adopted by the ECB (Toronto:. ECB -PA.TO – news) in particular, noted that “seem to have moderate effects,” although it “is not a matter currently under discussion for us.”
– Blackboard with contrasts –
On the domestic front, the Fed is shown a little more optimistic but divided
Nine members considered that rate. interest will be 0.9% at the end of 2016 instead of 1.4% of its projection released in December, one just felt that fall below, while three members are put at 1.125% and 1.375% four. This shows a discrepancy within the body of the Fed.
The Fed noted that inflation had “accelerated” in recent months, although it remains below the target of 2% of the Committee . The labor market had strengthened, with “solid progress,” said the institution.
In addition, said the US economy was continuing to grow “at a moderate pace despite the international economic and financial developments developed in recent months.”
On the other , the Fed also lowered its forecast for economic growth this year and for 2017.
the Gross Domestic Product (GDP) of the United States should increase 2.2% in annualized terms in the last quarter of 2016, ie 0.2 point less than expected three months ago, according to new projections released by the FOMC.
on the employment front, the Fed maintained its forecast for this year, with an unemployment rate expected 4.7% and a slight improvement in 2017 (4.6%).
The US unemployment rate is at its lowest point in eight years (4.9%) and is close to full employment provided by the central bank.
Under the new projections, however the Fed revised down its forecast for annual inflation in the country in 2016.
This year, consumer prices should grow over 1.2%, in the context of falling world oil prices, against 1.6% expected in December.
The goal of the Fed inflation of 2% annually formally reached in 2018, according to projections of the central bank.
These estimates, much studied and expected by the markets, however, they are difficult to interpret. Its authors remain anonymous, it is unclear who among the 18 members of the Committee are the ten voters who decide US monetary policy.
Yellen had to face his second dissension within the Committee since the beginning of his presidency.
Esther George, Kansas City Fed known for its more radical in favor of a less accommodative monetary policy positions, voted against the status quo of fees. It ruled in favor of the rise and preferred to be identified
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