Fed holds rates but continues to provide two hikes in 2016 – publico

 
         

                 

                         
                     

                 

 
 

The Federal Reserve US decided to follow what were the expectations of the markets and postponed once again a change in its main reference interest rates, keeping still the expectation that two increases may still occur this year. The institution led by Janet Yellen is thus a new holding pattern in the standardization process of its monetary policy at a time when the most recent data on employment and the referendum in the UK create new doubts about the sustainability of economic recovery in the United States.

in the announcement made on Wednesday to the markets, the Fed revealed that the rates are projected to remain in the range between 0.25% and 0.50% for at least another one month. At the same time, we have revised slightly downwards its projections for economic developments, confirming that the latest indicators brought less optimism about how it will evolve activity and the labor market.

“The pace of improvement in the labor market slowed, “the Federal Reserve said in a statement, pointing to a growing economy with predictions that do not exceed 2% in the coming years.

Still, the Fed continues to point to the possibility of being made until the end of 2016 two more rate hikes of 0.25 percentage points each. Janet Yellen and their peers believe that “economic activity will expand at a moderate pace and labor market indicators will strengthen”.

When, last December, held its first rise in interest rates of the past nine years, the monetary authority of the United States left signs that, during 2016, planned to hold four increases in interest rates, as the economy and the labor market were stabilizing. However, the uncertainty in the emerging markets soon began to delay such a decision during the first months of the year.

More recently, the rise of the vote in favor of an exit from the United Kingdom the European Union has been seen as a reason to be more cautious on rate hikes. Janet Yellen and other leaders of the Fed have stated on several occasions that an Brexit could have economic consequences very significant on a global scale.

A complete range of barriers to further increase rates also appear the most negative data labor market in the United States, which, despite the unemployment rate is already below 5%, still not give certainties of a sustainable recovery. In May, the slowest pace in six years in the creation of new jobs was recorded, which did much to change the plans of the Fed.

Now the question in the markets is to whether, by the next meeting of the Fed, scheduled for July, the obstacles to a new rate hike disappear. The betting among analysts polled by Reuters is that, if the employment data June show that the bad news May were only a small hiccup, the Fed will opt for a longer stirred in July. However, the outcome of the referendum in the United Kingdom and the corresponding reaction of the markets will always be crucial to this decision.