Thursday, November 3, 2016

Fed keeps interest rate unchanged but note that the increase is more next – Jornal de Negócios – Portugal

After the meeting finished on Wednesday, November 2, the U.s. Federal Reserve decided to maintain unchanged the interest rate in the range between 0.25% and 0.5%, a decision expected by the analysts because they approach the american presidential elections and is unlikely the Fed would take now a decision that could influence the final result of November 8.

This time only two members of the Fed (Esther George and Loretta Mester) voted in favor of an immediate increase of interest in the United States, less than three in September supported a new increase of the costs of the money.

however, in the statement released after the meeting of the institution led by Janet Yellen, which took place in the last two days in Washington, the Fed noted that the improvement of economic indicators reinforces the scenario of a new rise in interest rates that raises the speculation of an increase already in the month of December, which if so it will be the second in the space of a year.

“The Committee [monetary policy] considers that the case for an increase in the interest rate continued to strengthen-but decided, for now, waiting for additional signs” relating to the recovery of the largest economy in the world, you can even read in the note revealed after the end of the meeting that, this time, not culminated with the realization of a press conference.

The federal reserve note that are ongoing policy accommodative which will support the improvement of the conditions of the labour market and a return of inflation [the target of] 2%”. Still on the inflation rate, the monetary authority in the north american believes that this is expected to grow to 2% in the medium term.

on the other hand, to the Federal Reserve the risks facing the economic outlook in the short term “seem to essentially moderate”.
Quoted by The Guardian, the analyst-in-chief of the markets of Xtrade, Paul Sirani, begins by noting that the maintenance of the interest rates unchanged was expected, even by the approach of the u.s. elections, adding that, “however, it is becoming increasingly clear that Yellen will implement an increase [of interest] at the beginning of the next month taking into account the signs that the american economy is improving gradually”.

(News updated at 18:35 with more information)

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