Thursday , May 13 2021

The US Federal Reserve expects interest rates to remain unchanged as expected



The Federal Reserve Bank (FOMC) Federal Open Bank (FOMC), which was held until the 8th, will maintain the Federal Reserve (FF) interest rate guidance rate at 2.00-2.25%. They decided unanimously.

On November 8, the Federal Reserve unanimously decided to maintain the federal funds rate target of 2.00-2.25% in the Federal Open Market Committee (FOMC). The image is the headquarters of FRB in Washington. August Shooting (2018 Reuters / Chris Wattie)

The Fed said in a statement: "The labor market continues to tighten, economic activity is expanding rapidly". The strong rise in spending on employment and consumer spending has shown that the economy is not out of the way, maintaining its stance to continue with moderate interest rate hikes.

However, there was also an acknowledgment that corporate investment was moderated by the rapid pace seen since this year.

The policy change is as expected. The Fed has raised interest rates three times since its entry this year, and many believe it will shift to interest rate hikes at the next FOMC in December.

In the US, the inflation rate was around 2% targeted by the Fed and the unemployment rate declined. While it appears that the risk to the economy is mainly in balance, this statement has shown that FRB's view of the economy has not changed much since FOMC last September.

Given the weakening of October stocks and housing and corporate investment recession, some analysts also said the Fed would propose a skeptical view of the next interest rate hike.

However, the rise in interest rates in December seems to be still well received.

Boris Shoresburg, managing director of the BK Asset Management (NY) exchange rate strategy, said: "If it raises something unexpected, it was not a ridiculous thing either." The language of corporate investment has become more "moderate" than ever, as the wording is suppressed ever, but the Fed does not show any warning message beyond that. " .

Preliminary data for the third and fourth quarters of gross domestic product (GDP) announced by the Department of Commerce at the end of the previous month rose 3.5% yoy. In addition to the Fed, it has surpassed nearly 2%, which many economists consider to be the underlying trend.

However, Fed officials began to discuss whether the US economy has peaked, while the impact of the tax cuts and Trump expense management measures has fallen.

In this statement, there was no clear estimate of the volatility of the US stock market and the likelihood of a slowdown in the global economy next year.

No new financial perspectives will be announced to this FOMC and a press conference will not be scheduled by Fed Powell's chairman.

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