The Federal reserve system (FRS) left interest rates on Federal loan funds in the target range of 0.25-0.50% per annum, reports “Interfax” with reference to the communiqué on the results of the November meetings of the Federal open market Committee (FOMC).

The decision has coincided with expectations of analysts and market participants. In favor of the decision to maintain rates expressed eight members of the FOMC. The head of the Federal reserve banks of Cleveland and Kansas Esther George and Loretta Mester voted against this decision, speaking for the increase in the target rate to range of 0.5-0.75% at the November meeting.

The next meeting of FOMC will take place on 13-14 December and will be accompanied by the publication of macroeconomic projections and press conference by fed chair Janet Yellen.

“Information received since the September FOMC meeting indicates continued strengthening of the labour market and the stronger growth of economic activity compared to the moderate rate observed in the first half of this year, the document says. – Despite the fact that unemployment is little changed in recent months, employment growth was sustainable.”

“Consumer spending grew moderately, but business to invest in fixed capital was weak,” – noted in the fed. In the September message noted that the rapid growth of expenditure.

“Inflation has accelerated slightly since the beginning of this year, but remains below its long-run target FOMC’s 2%, reflecting, in particular, noted earlier, reducing the cost of energy and import prices, not energy-related, – stated in the message. – Market indicators of inflation compensation moving up, but remain low; most of the indicators of long-term inflation expectations generally changed little in recent months.”

From the draft communique were removed phrase about that “it expected inflation to remain low in the near term, partially due to the marked decline in energy prices”.
Now, the proposal stated in the following wording: “As expected, inflation will rise to 2% in the medium term following the termination of the temporary effects from previous declines in energy prices and imports, and also due to further strengthening of the labour market”.

The FOMC believes that the arguments in favour of lifting rates continue to increase, but at the moment decided to wait for some new signals to save progress in the movement towards the main goals of the U.S. Central Bank. “Monetary policy remains stimulating, supporting further improvement in conditions on the labour market and a return to 2% inflation”, – said the fed.

According to analysts, added to the September text the word “some” in relation to “new signals” is a subtle hint that the Central Bank is preparing to raise interest rates in December.

“For some time the interest rate will probably remain below the level that would prevail in the long run. However, the actual trajectory of change in interest rates will depend on economic Outlook based on incoming data,” explains the Federal reserve.

The fed kept the rate at a record low level for nine years, until 2016. So the U.S. monetary authorities reacted to the crisis with the help of cheap loans, they wanted to restart the economy. The explosive effect is not given, but the U.S. economy continued growth.

The market estimates the probability of a rate hike at the last meeting of nearly 80% compared to 70% on Thursday.

It is theoretically possible December rate hike should lead to a stronger dollar, declining oil prices and the weakening of the ruble, writes in Thursday newspaper “Kommersant”. However, according to analysts, all these movements for the most part already included in the price – and so in December they may be minor



The fed kept rates unchanged 05.11.2016

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