The Committee on open market operations of the Federal reserve system (FRS) left Wednesday’s unchanged base rate at the level of 0.25–0.5%, follows from the message of the regulator.
“Information received since the last fed meeting in March, shows that the characteristics of the labour market continued to improve, even despite the fact that the growth of economic activity appears to have slowed”, — stated in the message the fed.
Growth in household spending slowed, even though their real incomes are rising steadily, so that the consumer sentiment remains positive, follows from a press release. Also, the regulator fixes a number of divergent trends: since the beginning of the year the situation in the housing sector has improved, but the dynamics of corporate investment in fixed capital and net exports was sluggish.
Recent indicators, including the rapid growth in the number of workplaces, points to an additional strengthening of the labour market. Inflation continues to remain below target at 2% partly because of lower energy prices and falling prices for non-oil imports.
“Currently, the Committee expects that, with the consistent adjustments in relation to monetary policy, economic activity will expand at a moderate pace and the labor market will continue to strengthen. Inflation is expected to remain low in the short term, partly because of lower energy prices, but will rise to 2% in the medium term, when the transitory effects of lower energy prices and imported goods will come to naught, and the labor market will continue to grow,” the statement said.
The regulator also stressed that “the stance of monetary policy remains accommodative, thus supporting the further improvement of characteristics of the labor market and a return to 2 percent inflation”.
The decision was made almost unanimously: member of the Federal Committee on open market operations for raising the target rate by 0.25% from the current level of made only the head of the Federal reserve Bank of Kansas city Esther George. Earlier, the head of the fed Janet Yellen stated that the regulator should “exercise caution” when raising rates, as the slowdown in the Chinese economy and negative dynamics of oil prices are a potential global threat to economic growth on a global scale. After taken in Wednesday’s decision on the abandonment rates at the current level of Yellen unlike the meeting in March did not speak with the press.
In the last message of the Federal Committee on open market operations (FOMC) no longer mentioned, as in earlier press releases that “the development of the situation in the global economy and global financial markets poses risks,” the Committee merely promises to “closely monitor” the situation. Representatives of the regulator at the third meeting in a row for a bet refused to provide assessment, balanced the risks referred to in their economic forecast for this year. In December, the regulator announced was that the risks balanced, but after a series of peaks and drops in the financial markets in January word on the “balance markets” in press releases, the fed didn’t appear any more, says Bloomberg.
In December last year, the fed for the first time since 2006 raised its key rate by 25 b.p. — to the level of 0.25–0.5%. The Governor then explained his decision by the fact that the US economy is strong enough to start normalizing monetary policy. In March, the rate was left unchanged.