Central Bank: the fed’s decision should reduce the volatility of the financial markets

Central Bank: the fed’s decision should reduce the volatility of the financial markets


Statements of the U.S. Federal reserve on the gradual normalization of monetary policy and the decision adds certainty to market participants, which ultimately should contribute to reducing volatility in the financial markets, the press service of the Central Bank of Russia.

MOSCOW, 17 Dec. The decision of the Federal reserve system (FRS) the USA was expected and priced in, however the statement is normalizing the decision adds certainty, which should help reduce volatility in the financial markets, according to the Central Bank of Russia.

The U.S. Federal reserve on Wednesday for the first time since 29 June 2006 has raised the benchmark interest rate to 0,25-0,5% (on average 0,375%) with a record low of 0-0,25%. As stated by the head of the regulator Janet Yellen. The fed plans to increase the base rate to 1.5% in 2016 and 2.5% in 2017, but it will depend on the economic situation.

“The market has already factored in the US Federal reserve’s decision, which was expected. In addition, statements made by the leaders of the U.S. Federal reserve on the gradual normalization of monetary policy and the decision adds certainty to market participants, which ultimately should contribute to reducing volatility in the financial markets”, — said the press service of the CBR.

The Central Bank again said that in case of threats for financial stability of the Russian Federation will take the necessary measures. “In Russia the volatility of the ruble exchange rate is now largely determined by the dynamics of oil prices. However during the year there has been a gradual reduction in the volatility of the exchange rate of the national currency amid the gradual adaptation of market participants to a floating exchange rate, and also improve the situation with foreign exchange liquidity. The Bank of Russia is closely monitoring the situation and in case of threats for financial stability will be ready to take all necessary measures,” added the Central Bank.