Economists: U.S. fed will leave the benchmark interest rate unchanged

Economists: U.S. fed will leave the benchmark interest rate unchanged

In favor of increase does not say anything, since inflation is under control and the dollar too high, says, in particular, Professor in international Economics Brandesco University Alfonso Canelli.

WASHINGTON, 27 Oct. The Federal reserve (the fed) is due to announce a decision on whether to change the benchmark interest rate on Wednesday. Interviewed experts believe that the rate will once again remain at the same level because of possible negative effects on the global economy.

The fed last raised the base rate 29 June 2006. In 2007-2008, the regulator gradually reduced rate until, until it reached the lowest level of 0-0. 25% in December 2008. Low interest rate, according to the expectation of the regulator that was supposed to stimulate production, to send money to the real sector of the economy and help the U.S. recover from the crisis.

In September, before the next session of Committee FRS on the open market, interviewed experts noted that the mitigation program has not resulted in what they expected from it by the regulators. On the contrary, banks began again to inflate the “bubble” in the financial market, which at any moment can burst.

And although the repetition of the scenario of 2008 in the US afraid of everything, most experts and financial institutions are confident again that the rate will remain at the same level.

“I think people and markets will be surprised if the regulator will raise the rate”, — said the Director of the trade Institute of politics and Economics (EPI) Robert Scott. In his words, “there will be more questions than answers”.

Cannot increase

“I do not expect a rate hike, but I can’t predict exactly what they will do. I can just tell you what I think should happen. Inflation is under control, the dollar is too high, in favour of an increase doesn’t say anything,” notes Professor of international Economics Brandesco University Alfonso Canelli.

CEO Smith’s Research & Gradings Terence Smith believes that, despite the growth of employment and sales of real estate, so the fed probably will not do anything, how much and will raise rates a quarter from the usual pitch — 25 points (1 basis point is 0.01%). It will only be regarded as a signal to the market that the time of cheap money ends.

Chief economist at UniCredit Bank AG Lubomir Mitov believes that the true test of a rate increase — a measure that “will further confuse the market.” According to him, than to provoke panic, the rate had to be increased in September, then now would, in his opinion, already adapted.

“The U.S. economy is in excellent condition. Target inflation, if you remove the impact of low oil prices has already been achieved. Without this factor, the target inflation is just 1.7 to 1.9%,” he adds.

“The fed’s fears of the unknown are not in your market, and how to react to the increase in emerging economies that are now experiencing an unprecedented the most serious capital outflows for a few years,” continues Mitov.

Of course, tasks to take care of others at the fed no. But the regulator fears that the crisis will ricochet on US.

“Select no from the fed, as both the Eurozone and China announced the policy of raising interest rates,” says expert and expects that the rate will be raised in December.

Consequences for Russia

The change of the rate for Russia bodø negative factor, said earlier on the sidelines of the session of Moscow exchange forum in new York, former Finance Minister Alexei Kudrin.

According to him, the increase will trigger further capital outflows from emerging markets. The yield on the U.S. markets is growing, respectively, to invest in this sector will be higher than in emerging markets, he concluded.