Federal Reserve: Rates unchanged; no hint on timing of next hike

“It was one of the factors”, she said at the news conference. A Fed index that summarizes labor market conditions has fallen to the lowest level in seven years. The median prediction is now that the Fed’s benchmark rate will reach just 2.4 percent by the end of 2018, down sharply from the March prediction of 3 percent.

Those minutes suggested that a rate move was likely if hiring and economic growth strengthened and inflation showed signs of accelerating toward the Fed’s 2 percent target rate.

Updated projections from Fed policymakers point to annual economic growth of only 2 percent for the foreseeable future, slightly lower than forecast at the March policy meeting. For the Fed to publish projections that it will rise steadily to historic norms of three or four percent has been misleading. Will we see some movement from gold after the Fed announcement? Another piece of information to point out was that Kansas City Fed President Esther George rejoined the pack and did not vote against keeping the rate unchanged by unanimous vote. The chances of a June hike are just 1.9% compared to a 26.3% in May.

For weeks, the Fed had been expected to raise interest rates this summer, possibly as soon as June. In May, employers added only 38,000 jobs. He has argued the rate outlook has come to be viewed as a near commitment to act, which is at odds with the “data-dependent” policy officials are trying to implement. Later this year, the Fed might want to avoid injecting additional volatility by raising rates in the teeth of an election season. Yet, it’s found numerous reasons to drag that “gradual” out – nearly certainly now through this summer – and probably also until after the presidential election in November.

The Fed’s statement painted a mixed economic picture, pointing to the weaknesses mentioned above but also to a pick-up in economic activity, growth in household spending, and improvement in the housing sector. Stocks traded about where they were before the statement was released at 2 p.m. Eastern time.

If history is any guidance, it’s likely that Bremain would rule over Brexit at the end of the day even though the polls show otherwise.

Both those factors limit the potential of the economy to expand, causing the Fed to assume that short-term interest rates will need to stay lower than once expected. This is possible, but its remains a relatively low probability (not impossible though) as of now, as we believe in the rate normalisation theory as market distortions hamper real growth with its other negative consequences and can not last for infinity. But so far, the Fed has taken no action this year. Fed Chair Yellen claimed that politics have no impact, and that their decisions are based totally on the data. “I think the consensus has been moving that way for some time”. What’s worth highlighting here is that even steady Fed hawks backed away from pushing for a rate hike at the last meeting, which makes the Fed stance more dovish.

It was also the fifth day of losses for oil.

The Fed has held the rate since December in a range between 0.25% and 0.50%. It fell 48 cents and closed at $48.01 on Wednesday.

Bank of Starbucks (SBUX)? Now six officials see one increase this year and only two see three or more.

Big BAC layoff. Bank of America (BAC) plans to cut 8,000 jobs from its retail unit.

us stocks got a boost from rebound rallies in Asia and European stock markets. Investors exited equity ETFs and bought global ones in May. The euro lost early gains and was down to $1.1188 from $1.1268.

– “There is nothing in recent economic indicators that would lead the BOJ to change its economic outlook now”, said Norio Miyagawa, senior economist at Mizuho Securities. In a footnote the Fed noted that “one participant did not submit longer-run projections” without saying who it was.

Leave a Reply

Your email address will not be published. Required fields are marked *