Fed meeting: No change this time, June is in question. The Fed is unlikely to raise interest rates on Wednesday, but June is a more likely date Fed meeting in June
The US Federal Reserve will again buy assets ... October Fed USA will buy new securities for $60 billion every month. The regulator has not bought assets since 2014. The Federal Reserve System ( Fed) USA again... in Fed accepted after the volatility in the short-term securities market. Fed promised to introduce funds to the overnight repo market until January. Central Bank USA announced a return to asset purchases Fed to start buying assets again the head of the regulator... US central bank announces return to asset purchases ... , announced the head Fed. This is not a new round of quantitative easing (QE), he stressed, but the market is in disarray. The Federal Reserve ( Fed) USA will resume building up ... immediately indicated that Fed monitors "geopolitical risks", trade tensions and Brexit in the UK. IN USA meanwhile, there are signs of the future... Rebuild bank reserves Unlike QE, when Fed bought long-term government bonds USA in the secondary market, this time the US Central Bank intends to...Economy, 11 Sep, 16:02
Trump proposes to the Fed to cut the base rate to zero or lower ... Jerome Powell. President Donald Trump proposed to the Federal Reserve ( Fed) performing in USA functions of the central bank, reduce the base interest rate to zero or ... increased. Trump also noted that only naivete Fed and its head Jerome Powell does not allow USA"do what others are already doing... because of the idiots," the president concluded. In early September former head Fed USA Alan Greenspan, in an interview with CNBC, said that base interest rates will soon ... Trump frustrated with Fed chief after first rate cut since 2008 The president USA Donald Trump after the decision of the Federal Reserve ( Fed) to cut the rate by 25 basis points, said on Twitter that ... assistance from the Federal Reserve," the president added. Wednesday, July 31st Fed USA for the first time since the global financial crisis of 2008 reduced the base ... -2.25%. ex-chairman Fed Janet Yellen has previously said she supports a 25bp rate cut. USA- part of the global economy, stressed ... The US Federal Reserve cut rates for the first time since 2008 Fed USA for the first time in a decade, it lowered the rate, fully meeting the expectations of analysts and ... from other central banks, including the Russian one. Federal Reserve System ( Fed) USA, which performs the functions central bank countries, for the first time since the global financial... USA, and a “monetary shock” would be needed to continue growth, Pokatovich reasoned. After Fed hinted in June at a rate cut, USA ... Interest-bearing stock: why the Fed should not succumb to Trump's pressure ... of the Open Market Committee Fed USA players are actively discussing the possibility of the first rate cut in ten years by the world's leading regulator. Fed found itself in a difficult... sensitive to economic growth, especially shortly before the election. presidents USA who were going to a second term in a period of clear economic growth ... which could have been used much more rationally. current rate Fed roughly corresponds to inflation, which is typical for a neutral monetary policy... In 2019, Russia doubled its plan for foreign currency loans. Sanctions and geopolitical risks cannot bring down interest in Russian securities ... from Fed The Ministry of Finance chose the moment for placement extremely well, the analysts interviewed by RBC are in solidarity. It is close to ideal, given the outcome of the meeting Fed USA on Wednesday (the American regulator sees everything more arguments in favor of policy easing) and a sharp decline in yields valuable papers Treasury USA... there will be positive news about trade relations USA and China. Optimism in global markets after the meeting Fed USA guaranteed a high demand for Eurobonds, no... Russia to place Eurobonds after easing Fed rhetoric ... Timing for placement is close to ideal given yesterday's meeting Fed USA(the regulator sees more and more arguments in favor of easing the policy) and ... the reaction of the global debt market, a sharp decline in the yields of Treasury securities USA and emerging markets, lists chief economist Russian fund direct investment... capital” Alexander Losev. Optimism in global markets after yesterday's meeting Fed USA guarantees a high demand for Eurobonds, and no sanctions and geopolitical... Bloomberg learned about Trump's confidence in the authority to fire the head of the US Federal Reserve ... USA Donald Trump believes that he has all the necessary powers to remove the head of the Federal Reserve from office ( Fed... criticized the chapter as well Fed Jerome Powell, whom he himself nominated for this post. Later economic adviser to the President USA Kevin Hassett said there are no risks of the resignation of the head Fed. “Yes, of course, 100%,” Hassett replied ... The US Federal Reserve left the key rate unchanged Federal Reserve System ( Fed) USA kept the key rate at the level of 2.25–2.5% per annum. This is stated in the publication Fed. The ministry noted that since the last meeting of the financial regulator on May 1, the labor market in USA remains strong... do not change the key rate. At a meeting in early May, the chairman Fed Jerome Powell noted that there was no good reason to change key rate... The US Federal Reserve refused to raise the key rate ... Federal Reserve System ( Fed) USA, which performs the functions of the Central Bank of the country, has kept the key rate in the range ... follows from the materials published following the meeting of the heads of the department. Chairman Fed Jerome Powell stated that there is no good reason for the increase or ... will be maintained for a long time. March of this year Fed also did not raise the base interest rate. Then there...Economics, 20 Mar, 21:36
The ruble strengthened to a maximum since August 2018 against the backdrop of the decision of the US Federal Reserve ... (Fed) USA announced its decision to keep the base interest rate at 2.25-2.5%. In addition, the forecast for GDP growth has been lowered. USA in... and from 2.1 to 2% in 2020. Also Fed declined to raise rates further. The price of WTI crude oil ... . Ryabkov considered the refusal of the dollar to protect the economies of countries from actions USA“Oil prices are consolidating for a relatively high levels, current account...Economy, 20 Mar, 21:31
The US Federal Reserve refused to raise rates this year ... to the current range of 2.25–2.5% Fed ( Fed) USA, which performs the functions of the country's central bank, has retained the base interest rate on ... the department's materials published following the meeting of its leaders. Earlier rate Fed was set in the range of 2.25-2.5%, the median value ... there will be two increases, in 2020 - one. Also Fed lowered the GDP growth forecast USA in 2019 and 2020: from 2.3 ... Trump adviser said there are no risks of the resignation of the head of the Fed ... ". He also stated that Fed is the only economic problem USA. Bloomberg learned about Trump's discussion of the dismissal of the head Fed Subsequently, Bloomberg learned that Trump had repeatedly discussed the dismissal of the head with his entourage. Fed ... Bloomberg learned about the possible dismissal of the head of the US Treasury ... Mnuchin's tenure depends on stock market performance President USA Donald Trump is considering firing Treasury Secretary Steven Mnuchin. About... Citigroup. “We continue to see strong economic growth in the economy USA with sustained consumer and business activity,” a spokesman for Mnuchin said. However ... the reason for Trump's thoughts on Mnuchin was his dissatisfaction with the work of the head Fed Jerome Powell. According to the agency's sources, the head of state was interested in whether... Trump called the only problem of the American economy ... The president USA stated that the main problem of the American economy is the existence of the Federal Reserve System ( Fed). In his opinion, the regulator does not understand what is happening in the country. “The only problem of our economy is Fed" Donald Trump tweeted. “They don’t feel the market... how the president on his Twitter talks about the successes of his administration, Fed predicts a slowdown in the US economy. As a result, last... Fed raises key rate despite Trump's demands ... -release Fed USA It is noted that the American economy shows steady growth rates, and the situation in the labor market continues to improve. Economic risks USA"roughly balanced," states the regulator. At the same time, as experts expected, the American regulator corrected the "dot chart": now Fed USA waiting... Trump criticized the work of the head of the US Federal Reserve ... The president USA Donald Trump blamed the leadership of the Federal Reserve System ( Fed) USA in recession stock markets, and also spoke about dissatisfaction with the work of the chairman Fed... not blaming anyone, but just telling you what I think that Fed in his work is far from reality, ”Trump said, adding that ... Chris Koons - sent a letter to Trump asking him to stop criticizing Fed. According to senators, the American leader cannot fire Powell without... Trump named the biggest threat to himself ... the independent Federal Reserve ( Fed), at the end of September for the third time in a year increased the key rate President USA said that the main threat... -2.25%. Its decision in the Federal Committee on the open market Fed USA motivated by the fact that the country maintains a low level of unemployment, growing ... . Trump is unhappy: what does the increase in the main rate mean Fed USA At the same time, the President USA He has repeatedly criticized the rate increase, pointing out that ... Trump called the Fed's actions a mistake amid falling stock indices ... service USA (Fed) is making a mistake, US President Donald Trump said amid a sharp decline in major stock indices, CNN reports. "I think Fed commits... Fed gone crazy,” Trump told reporters. He stressed that the fall in stock indices is a correction that has long been expected. Stock indices in USA... dissatisfied: what does the increase in the main rate mean Fed USA After the latest raise, Trump said he was unhappy with this decision Fed because it will increase...Finance, 27 Sep 2018, 17:15
Trump is unhappy: what does the increase in the main rate of the US Federal Reserve mean ...and maintaining the inflation target of 2%. Forecasts Fed favorable: GDP growth USA at the end of the year will be 3.1 instead of 2.8 ... participants in the committee meetings, Klyushnev suggests. How did you react to the decision? Fed Trump? The president USA Donald Trump, when it became known about the next rate hike... . For a long time factor of multidirectional policies of regulators in Russia and USA(rate hike Fed and reduction by the Central Bank) put pressure on the ruble. For investors...Finance, 27 Sep 2018, 05:38
Trump announced negative consequences increase in the key rate of the US Federal Reserve ... US President Donald Trump criticized the leadership of the Federal Reserve System ( Fed) USA for another increase in the key rate. The Washington writes about it ... the fact that they seem to like growing interest rates' Trump said. Fed USA raised the key rate for the third time in a year. According to him ... noted that Fed should now take other actions. September 26 Federal Open Market Committee (FOMC) Fed USA decided to increase...Finance, 26 Sep 2018, 21:01
The US Federal Reserve raised the key rate for the third time in a year ... Fed USA raises the key rate for the third time in 2018 - ... On Wednesday, September 26, the Federal Open Market Committee (FOMC) Fed USA decided to raise the key rate by 0.25 pp... the year will be raised four times. Line Fed to raise the rate has already attracted criticism from the president several times USA. In July, Donald Trump said... Reuters reported on Butina's meetings with the deputy heads of the Fed and the US Treasury ... Arrested in USA Russian woman Maria Butina participated in meetings with officials of the Ministry of Finance and Fed USA in 2015. This may indicate that Butina has "wider" contacts in USA than was thought... Stanley Fischer, who at the time served as vice Fed USA, and a meeting with Nathan Sheets, who on that... Deutsche Bank fails US stress test ... » bank in USA was the only one out of 35 organizations that did not tested on crisis resilience. According to the results of the stress test Fed also demanded... a second round of the Federal Reserve's annual testing USA writes The Wall Street Journal. IN Fed said the bank had "critical shortcomings... Morgan Stanley" financial authorities USA ordered to freeze the size of dividends, writes the Financial Times. In the case of other large banks Fed acknowledged that they... Out ' vulnerable five»: how the growth of rates in the US affects the ruble exchange rate ... Following a two-day meeting of the Federal Open Market Committee (FOMC) Fed USA On June 13, it decided to raise the key rate by 0.25 ... at a price of 63.23 rubles. per dollar. Key rate hike Fed USA, of course, makes dollar-denominated instruments more attractive, which hits... emerging markets, the analyst points out. Greatest sensitivity to monetary tightening Fed USA show the currencies of those countries that were previously allocated to the so-called ... The US Federal Reserve kept the key rate ... USA decided to keep discount rate at the level of 1.5–1.75% per annum. The decision became expected for the market Federal Reserve System ( Fed) USA... grow at a moderate pace and labor market conditions will remain strong. Fed raised the key rate for the first time in a year "Taking into account... a steady return to 2% inflation," it was reported. Solution Fed leaving the key rate unchanged was unanimous. The solution matched... Türkiye removed its gold reserves from the US ... Turkey's bank moved the country's gold reserves out of the Federal Reserve USA (Fed), follows from annual report published on the bank's website. It notes... Fed 28,689 tons of Turkish gold were stored. In a similar column for 2017 there is a dash. Relations between Turkey and USA aggravated ... by the Kurds The arrest in USA Turkish banker Mehmet Hakan Atilla. U.S. Attorney's Office wants to sentence him...Finance, 21 Mar 2018, 21:01
The Fed raised the key rate for the first time in a year ... embedded in financial asset quotes, analysts say the Federal Reserve System ( Fed) USA raised the key rate by 0.25 percentage points - now it is ... long-term,” the FOMC said in a statement. Median Forecast Fed in terms of GDP growth USA improved to 2.7% in 2018 (after... on the outlook for the economy USA improved since December. This statement was regarded by the market and analysts as a signal that the new head Fed will host more...Money, 05 Mar 2018, 19:14
Following oil: what will be the dollar and euro in March ... on the oil market and news from the US Federal Reserve ( Fed). The decision of the Central Bank of the Russian Federation on the key rate and the inflow of speculative capital ... decisions Fed USA and the Bank of Russia on rates. Meeting Fed March 21 will be chaired for the first time by new leader Jerome Powell. The market expects Fed... of the money market IC Veles Capital Yuriy Kravchenko. If the decision Fed will coincide with market expectations, the markets will not show significant dynamics, adds...Money, 08 Feb 2018, 07:32
Calm in the absence of sanctions: what will determine the ruble exchange rate in February ... relative stability. “There are no grounds for further growth in oil prices yet, USA are actively increasing production. At the same time, there are reasons for a significant drawdown in oil... will closely monitor the rhetoric Fed USA. IN Lately increased the likelihood of a rapid tightening of monetary policy in USA which can help strengthen... ... Open Market Committee Fed USA raised the key interest rate by 0.25 p.p. - up to ... was expected, experts say Federal Open Market Committee (FOMC) Fed USA following a two-day meeting, he raised the key interest rate (federal funds ... , GDP growth forecast USA for 2018 was increased from 2.1% to 2.5%. No Surprises Solution Fed met expectations... Between oil and sanctions: what will determine the ruble exchange rate in December ... including depend on decisions Fed USA and the Bank of Russia at interest rates in mid-December ( Fed will announce its decision on December 13 ... . In this regard, the rhetoric of the leadership of the Bank of Russia and Fed USA, which will give the market a signal what will happen to the yields in the market ... depend on the decision and rhetoric Fed, prospects for US tax reform, ECB rhetoric and macroeconomic statistics from USA and the eurozone. Analysts believe... Oil on the rise: what factors will determine the ruble exchange rate in November ... demand for ruble assets from investors, intentions and actions Fed USA, as well as the development of the situation around anti-Russian sanctions. It is these factors... IC "Freedom Finance" Georgy Vashchenko draws attention to the fact that Fed USA may raise the key rate in December of this year, and the reduction ... the market will also have an effect Fed USA. President last week USA Donald Trump names new leader Fed- at the end of Janet Yellen's term... Oreshkin appreciated the working conditions of the new head of the US Federal Reserve ... economic development of the Russian Federation Maxim Oreshkin told reporters that the new head Fed USA you will have to work in difficult conditions, an RBC correspondent reports. According to him ... the so-called Minsky moment,” the minister said. “In order to prevent the acceleration of inflation, Fed USA may be forced to tighten policy more seriously than participants now expect ... and maximum employment. In 2017, the Open Market Committee Fed USA twice decided to increase the base interest rate (federal funds ... Donald Trump officially announces the name of the new head of the Fed ... . Speaking to reporters at the White House, Trump noted that the economy USA has made "incredible progress" lately. “He has proven he can… the house has already notified Powell of the upcoming appointment. Powers of the current head Fed Janet Yellen, appointed by Barack Obama in 2012, is expiring in ... the administration of the head Fed during the first term of the presidency will be the first case in the last 40 years. IN last time newly elected president USA So... Money, 02 Oct 2017, 18:23 Direction of the ruble: how the dollar and euro will change in October ... rates (currently 8.5% per annum), while Fed USA already this year may increase its base rate (now... surprises from Fed, they emphasize that one must nevertheless monitor the rhetoric of the US Central Bank and the reaction to it. "Statements Fed USA on... Dmitry Postolenko. In the meantime, the announcement of plans for tax reform in USA provides exclusively psychological support to the American currency, since in order to implement ...According to the forecast of the analytical company CME Group, at a meeting on June 13-14, the US Federal Reserve () will raise the key rate again - for the third time in a row in seven months. Experts estimate the probability of this at 99.6%.
In addition, economists expect the regulator to make at least one more rate hike before the end of the calendar year.
Weak inflation and relatively weak growth in the first quarter of 2017 will not change the view of the US central bank that a rate hike is reasonable given the low unemployment rate. Also, following the results of the two-day meeting, updated economic forecasts will be published, and the Fed chairman will hold a press conference.
“I think they are going to raise rates and will continue to stick to the current course”, says Ryan Sweet, an economist at Moody's Analytics.
Earlier, Fed officials said they were not worried about the strength of the economy. The regulator considers the weak growth in the first quarter to be temporary and believes that inflation will continue to move towards the target of 2%, according to Marketwatch.
A member of the Fed's Monetary Policy Committee (FOMC) noted in a recent speech that
inflation has been below the target for the past five years, so now it "does not make sense" to lose patience and wait for it to accelerate immediately,
quotes policy from The Economic Times.
June 14 will be published May reports on the dynamics of consumer prices and retail sales, but these data are unlikely to affect the rate hike in June. However, if the results turn out to be significantly weaker than expected, this could jeopardize the rate hike in September and potentially change the tone of the Fed's statement, said UBS economist Seth Carpenter.
Experts express a much less consistent position regarding the Fed's plans to reduce the volume of treasury and mortgage bonds on its balance sheet, the value of which now exceeds $4.5 trillion.
The main question is when can the reduction start, in September or December? Analysts are going to evaluate whether the Fed will change the language of its policy statement about plans to maintain balance "until the level of the federal funds rate is normalized." If the Fed says that normalization is “in full swing”, this will be a “clear marker” according to which the balance sheet reduction will begin as early as September, Seth Carpenter is sure.
The President of the Federal Reserve Bank of Philadelphia spoke about the possibility of reducing the volume of bonds on the balance sheet in January, who considered the key point to increase the base interest rate to 1% (since March it has been in the range of 0.75-1%). However, most economists do not expect such drastic changes in the regulator's plans and are counting on the start of the reduction in December. In any case, experts are confident that Fed Chair Janet Yellen will start the cut program before her term expires at the beginning of next year writes CNBC.
Economists believe the Fed will make another rate hike this year and three more in 2018, bringing the federal funds rate to 2.1% by the end of 2018.
However, there are doubts in the market about the increase base rate at the September meeting: the probability of this is now estimated at only 23%.
UBS believes that the probability of a twofold increase in the rate during 2019 (and, accordingly, no further increases in 2017) is 40%.
A number of experts believe that
the rate increase in September will be prevented by another achievement of the US government debt ceiling, which can be frozen at $20 trillion.
On Monday, June 12, US Secretary of the Treasury Stephen spoke about this problem. “If, for whatever reason, the Congress does not begin to act before August, we will be able to use contingency plans to finance the government. Therefore, I want to make it clear that the time frame will not create a serious problem. However, the markets do not want to wait for us, and the problem of public debt should be solved now, ”Mnuchin said.
On June 14, the US Federal Reserve System (FRS) decided to raise the base interest rate by 0.25 percentage points. - up to 1-1.25%. Experts note that this decision may moderately reduce investors' appetite for ruble-denominated assets.
As a result of a two-day meeting on June 13-14, the leadership of the US Federal Reserve decided to raise the base interest rate by 0.25 percentage points. up to 1-1.25%, according to the website of the regulator. This decision coincided with the expectations of most economists and market participants.
The statement notes moderate growth of the US economy, the inflation estimate (PCE index) for 2017 has been reduced - from 1.9% to 1.6%.
The Fed is still looking forward to another, third rate hike in 2017, the report said. In determining the rate of adjustment of the base rate range in the future, the Fed will focus on labor market indicators, inflationary pressure and inflation expectations, as well as take into account international events, the statement emphasizes.
The communiqué also said that the Fed plans to begin reducing assets on the balance sheet, which reached $4.5 trillion after stimulus programs. The Fed will reduce reinvestment in Treasury bonds and mortgage-backed federal agencies. The reduction in Treasury cuts will amount to $6 billion per month and will increase by that amount every quarter until it reaches $30 billion per month. For mortgage-backed securities of federal agencies, the reduction in reinvestment will be $4 billion per month and will increase by the same step every quarter until it reaches $20 billion per month.
Expected rate hike
According to the Bloomberg consensus forecast, out of 100 economists surveyed, 95 expected a key rate increase of 0.25 percentage points. According to futures data on the CME Group (a group of the Chicago Mercantile Exchange), on the day before the meeting, the probability of a rate increase of 0.25 percentage points. at the June meeting was 93.5%.
“Most investors have long been confident in the tightening of the monetary policy of the US Federal Reserve at the June meeting, which means they took this factor into account when making changes to their portfolios,” said Bogdan Zvarich, an analyst at Finam Group.
Significant decision
“When making a decision, the Fed was guided by the achievement of the so-called full employment in the labor market,” says Ivan Kopeikin, an expert at the FG BCS.
Based on the results of the last meeting (May 2-3), experts pointed to the fact that significant decisions are made at extended meetings with a press conference. And so it happened - at extended meetings in March and June, it was decided to raise the rate. In 2017, two more extended meetings will be held on September 19-20 and December 12-13.
The US Federal Reserve began a policy of raising the rate on December 14, 2015, raising the rate by 0.25 percentage points. A year later, in December 2015, the Fed again raised the rate by 0.25 percentage points. The next increase by 0.25 p.p. was in March 2017.
The impact of the Fed on the ruble exchange rate
Igor Dmitriev, head of the Central Bank's monetary policy department, said in an interview with Reuters on June 8 that the Fed's June rate hike has already been taken into account in the Central Bank's monetary policy. According to him, it is necessary to pay attention to the accompanying comments. The Fed's focus on inflation or the labor market will make it clear what the Fed plans to do to raise rates, he said.
Experts interviewed by RBC also advise paying attention to the Fed's comments. According to Zvarych, with the increase in the rate, funding in dollars becomes more expensive. As a result, the spread between the cost of funding and the yield of Russian assets is getting smaller. Hence the decline in interest in Russian instruments, the expert explains.
“Increasing the base rate is likely to reduce appetite and, accordingly, have a negative impact on Russian assets and the ruble, but the effect will be insignificant, since the decision is already priced in,” said Ivan Kopeikin, an expert at BCS FG.
Changes in the Fed's rhetoric and market expectations regarding the trajectory of the rate increase may affect the further steps of the Central Bank, says Yakov Yakovlev, senior analyst at ATON Investment Company for macroeconomics and debt markets. According to Zvarych, if the Fed takes a break in the rate hike cycle until December 2017, the Central Bank will be able to further reduce the rate at the next meetings.
"Naturally, the Fed's rate increase will lead to some pressure on the Russian ruble (which, however, is moderately favorable for exporters and the federal budget)," says Sergei Khestanov, macroeconomic adviser to the CEO of Otkritie Broker.
Market reaction
US indices reacted to the Fed's decision with a moderate decline. By 21:45 Moscow time in relation to the opening level today the S&P 500 index fell by 0.25% to 2434.1 points, the NASDAQ - by 0.53% to 6188.2 points, the Dow Jones Industrial Index - by 0.06% to 21314.9 points. The DXY index (which shows the ratio of the US dollar to a basket of six major currencies - key US trading partners) fell by 0.07% to 96.9 points.
The decision had a moderately negative impact on the ruble exchange rate. On the MICEX, the ruble depreciated against the dollar by 0.78% to 57.42, against the euro by 0.98% to 64.51.
The event will contain a number of points that investors should pay attention to. It should be noted that neither the Fed's digital forecasts nor Janet Yellen's press conference are scheduled this time.
. Interest rates. In March, the key rate was increased by 0.25% to 0.875% (range 0.75-1%), the third revision since December 2008. This time, no changes in monetary policy are expected. This will not come as a surprise, the Operations Committee on open market The Fed (FOMC) traditionally adheres to a policy of active action, preferably at the so-called pivotal meetings, which May is not (). Worthy of note is the Fed's view of future prospects monetary policy.
In detail
. General state economy- can be assessed as a temporary (preferably) weakening. According to the first assessment, in the 1st quarter. UWB GDP added only 0.7%. The dynamics is the worst in three years. In the 4th quarter. In 2016, the growth rate was 2.1%. Note that while the US macro data is not too encouraging. The Citi Macro Surprise Index, which shows how much the actual data differs from the forecast, has collapsed sharply over the past couple of weeks.
Source: Zerohedge
These data are mainly for the weak 1st quarter. On the 2nd quarter. Analyst consensus assumes a 2.7% increase in the US economy, and the Atlanta Fed (GDPNow service) +4.3%. It is noteworthy that in the 1st quarter. GDPNow initially predicted +2.5%, the estimate gradually slipped to +0.2%. If there are no positive changes in the April data, then there is a factor against raising Fed rates in the near future.
. Labor market- perhaps one of the key factors that the Fed is guided by in the current conditions. The situation on the labor market, observed in March, looks ambiguous. In general, the segment is close to the state of the so-called "full employment". One part of the report, based on surveys of households, indicated a decrease in unemployment from 4.7% to 4.5%, while analysts expected it to remain at 4.7%.
At the same time, payrolls showed a very weak growth of jobs outside the agricultural sector by only 98 thousand compared to the forecasted 180 thousand. It must be understood that non-farm payrolls are periodically subject to serious revisions. Medium wage compared to February added 0.2%. On an annualized basis, the indicator rose by 2.7%, not far from +3%, at which the Fed would be more confident in raising rates.
. Inflation. The figures are close to the Fed's 2% target, but have cooled off a bit lately. Thus, the growth of the Fed-loved price index of consumer spending in March y / y amounted to 1.8%. Core PCE (excluding food and energy, which are volatile components) rose 1.6% year-over-year. In March, the Consumer Price Index increased by 2.4% after +2.7% in February. The weakening of oil prices affected, the main culprits are US oil and gas companies, which are actively increasing production.
As a result of the December meeting, the Fed predicted 3 stages of increasing the key rate by 0.25 percentage points. for this year - up to 1.4%. According to the derivatives segment (CME FedWatch), the next (after March) increase in the fed funds rate should be expected in June, and then in December.
Following the meeting of the US Federal Reserve, financial market participants, investors and analysts expect an increase in the base interest rate by 25 basis points - from 1% to 1.25% with a probability of 95.8%. Such data was published by the Reuters agency the day before. Earlier, Fed officials announced three planned rate hikes in 2017. The first was at the spring meeting of the regulator: in March, an independent agency increased the rate from 0.5-0.75% to 0.75-1%. For the first time in ten years, the Fed decided to tighten monetary policy in December 2015.
The main signal to increase the interest rate for the Fed is macroeconomic statistics. According to the US Department of Labor, the unemployment rate in May 2017 fell to 4.3% year on year. At the end of the year, the Fed predicts the value of this indicator at the level of 4.5%. Annual inflation in the US in May amounted to 2.3% with the monetary authorities' target of 2%.
As Maxim Shein, chief strategist at the BCS management company, noted in a conversation with RT, the Fed is now purposefully following the plan to raise the rate to 3% by 2019.
"The most important thing for federal agency now it is inflationary processes. The Trump administration's measures to reform the system (including reducing financial regulation and increasing spending on infrastructure) will inevitably lead to faster inflation. In order to keep inflation under control, it is necessary to raise rates in advance. If the rate is raised following the results of the June meeting, this will mean that inflationary pressure is expected to increase in the United States in the next six months, ”explained RT Shein.
Investors are also awaiting statements from Fed Chair Janet Yellen following the meeting. The main intrigue for market participants is whether the regulator is ready to reduce its balance sheet until 2018, that is, before the expiration of Yellen's powers. In 2017, Fed officials already announced the likely start of a $4.5 trillion reduction in the balance sheet of the system. It is possible that at the meeting on June 13-14, a strategy for reducing Treasuries in the Fed's $2.5 trillion portfolio and $1.8 trillion in mortgage bonds will be discussed, Bloomberg interlocutors say. However, as analysts at Goldman Sachs and Morgan Stanley predict, the Fed will decide to announce balance sheet cuts before autumn.
Anxious public
The market expects an increase in the base interest rate of the US Federal Reserve, and if this does not happen, then for the American public this will become a signal of the agency's dissatisfaction with the state of the US economy. This assumption was made in an interview with RT by a professor at the Paris School of Economics, Gilles Saint-Paul.
“According to the results of the meeting, it is most likely that a decision will be made to raise the rate, which should lead to an increase in the dollar against the euro. But the effect will be small, since this decision will be highly expected, it is already reflected in the current exchange rates,” said Gilles Saint-Paul.
An increase in the rate will change the balance of positions in the dollar / euro pair and lead to some strengthening of the US dollar in the medium term, predicts in a conversation with RT Researcher Ludwig von Mises Institute Mark Thornton.
“I think that the Fed will raise the rate by 25 points to 1.25%, which will lead to an increase in the value of the dollar against the euro. Since the beginning of this year, the European currency has been leading the dollar / euro pair - from January to May, the euro has strengthened against the dollar by 5.4%, ”said Thornton.
The day before, against the backdrop of waiting for a decision on the Fed's interest rate, the dollar showed strengthening against the euro in foreign exchange trading. Thus, the euro dropped to $1.12.
