The rate of funding of the central bank of the united States passed to a range of between 0.50 to 0.75 percent.
Janet Yellen, said that it is early to anticipate the tax policy that will apply to the new administration and its impact. Photo: AP
With a unanimous vote, the Federal Open Market Committee (FOMC), the Fed increased the target Federal Funds Rate by 25 basis points.
"In view of the current conditions and expected labour market and inflation, the Committee decided to raise the target rate", detailed in the press release.
With this decision, the Funds Rate went from 0.25 to 0.50%, where it remained for a year, to a range of 0.50 to 0.75 points.
as he anticipated the market, the statement detailed that "the committee expects that economic conditions will hold only gradual increments of the federal funds rate".
however, in the so-called dot plots that accompany the release of December, the members of the committee recognize that there could be three increments more in 2017, which means that see the opportunity to climb once more than what is provided by them in September.
The chairwoman of the Fed, Janet Yellen, noted that can’t be compromised with a speed in the rise of rates, because it also depends on the dynamics of productivity.
Since September, the president of the federal Reserve bank of Kansas city Esther L. George, and the governor Loretta Mester have maintained their position in favour of a rise in rates. In September, a member of the Committee coincided with them, the president of the Fed of Boston, Eric Rosengreen, however, for the November meeting, changed his position.
The banking center runs from February his last year as the head of the Fed, as the president-elect of the united states, when a candidate, expressed his disagreement with the pace that has carried Yellen hikes rates. And one of his advisors recognized that it is not among the intentions of Donald Trump ratify it, to repeat the charge.
terms and Conditions
At the conference, Yellen explained on more than two occasions that the next rate hike will depend on the behavior of the economic indicators, the inflation guide from more weight the next decisions.
as pointed out by analysts, as CapitalEconomics, the fiscal plan that could be implemented in the incoming president of the united States to stimulate the economy could generate pressures of inflation.
in this regard, Yellen explained that it is early to anticipate the tax policy that will apply to the new administration and its impact on the economy, but a few times repeated, "it will have to be validated by the Congress."
as he did last December, when the FOMC made the first movement to the upside, also of 25 basis points, he emphasized that neither she nor the Committee have in mind a certain level or objective for the funds rate.
"above the level of the rate will take into consideration the performance of the economy (…) The decisions on the rate not have to do with an objective in its own revenue. Rather, it will move to the rhythm that go by checking the economy and inflation," he said.
diagnosis
The release of the second rate hike of the Fed since June of 2006 brings a number of forecasts for the economy of EU.
The median of these forecasts is an expansion of 2.1% for next year, which contrasts with 2% estimated in September.
About the unemployment, estimated to be located at 4.5% next year, which shows a minor revision downward from 4.6% estimated in September.
And on inflation, remained unchanged its forecast that it could close next year at 1.9%, as expected three months ago.
the forecasts assume that for this year the economy of the USA closed with a growth of 1.9%, which represents a variation of light rising with the forecast of three months ago it was at 1.8 percent.
With this rise in the reference interest rate, continues the process of normalisation of the monetary policy of the united States that started in December of last year, and that was paused for a year, the ups and downs that threw the economic activity of that country, particularly, with the "consistency" of the trend of the labour market that limited the decision of the committee.
what Happens to the period of extraordinary expansion of the monetary policy of the Federal Reserve of the united States, with which he faced the first global financial crisis of this century, originated by the first economy of the planet.
Follow-up to Mexico
Analysts of the Institute of International Finance (IIF) explained that the policy of the united States will create headwinds for emerging markets that could be exacerbated by trade policies and anti-immigrant policies that apply to the new administration, including Mexico.
Gabriel Casillas, head of Economic Analysis and Stock market Banorte, explains that the market already taken the rise of 25 basis points of the Fed and that it anticipates that the central bank will increase the rate, Thursday, 15, in the same proportion.
The decision of Mexico will be to follow the trend of the Edf and respond to the pressure of exchange rate that is already feeling the inflation.
From New York, the economist for Latin America at Goldman Sachs Alberto Ramos, a slogan that there is 30% chance that the rise in rates in Mexico is 50 basis points. His baseline scenario is that of an increase in Mexico which takes the rate to close the year at 5.50 points, which would be above a rate neutral and would leave the position in restrictive.
ymorales@eleconomista.com.mx
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