The last meeting of open market Committee of the Federal reserve system (the fed) has shown that the regulator expresses concerns about the implementation of the December forecast of four increases in the key rate this year, says the Agency Bloomberg with reference to the minutes of the meeting.
First, the fed is worried about the slowdown of the Chinese economy. According to financiers, the deterioration of the situation in the PRC may lead to tension in the financial system of developing countries and, most importantly, in the economies of major US trading partners such as Mexico and Canada. In this case, the Agency said, if the prospects of China is still not clear to the next meeting of the fed, to tighten monetary policy, many members of the Central Bank too bold.
Another cause for concern is the volatility of global financial markets. The consequences for the economy, further sustained fall in shares and expansion of credit spreads will be “almost tantamount to a further tightening of monetary policy.”
Thirdly, the Agency said, the fed heads believe that the forecasts for the us economy have become more uncertain, and therefore it is reasonable to verify the accuracy of forecasts for inflation. In December, the fed predicted the achievement of 2% inflation by the end of 2017.However, if the timing will have to be reviewed, the rate of increase of the rates, is likely to slow, the Agency said.
On 10 February the head of the Federal reserve system of the USA Janet Yellen said that the management of the regulator keeps plans a gradual increase in the key rate, however, may delay their implementation due to the difficult market situation.
The fed explained that meant falling prices for a number of shares, the increase in interest rates on loans and strengthening of the dollar. According to Yellen, if these trends are persistent, they can affect the forecast the fed regarding the prospects of the dynamics of the level of economic activity and unemployment in the United States.
In the middle of December 2015 the fed for the first time since 2006 raised its key interest rate by 0.25 percentage points, establishing it at the level of 0.25–0.5%. The reason for the rate hike by the fed called U.S. economic recovery, as indicated by data on unemployment and inflation. Later it was claimed that the fed may continue to raise rates, however, at the meeting of January 27, it was left unchanged.
New quarterly forecasts for the U.S. economy and possible rate of increase of the rates in the coming years, the fed will present At the meeting on March 15-16.