The fed kept rates at 0.75-1%


Moscow. May 3. INTERFAX.RU – Federal reserve system (FRS) the USA following the meeting on 2-3 may have decided to keep the target range for interest rates on Federal loan funds (federal funds rate) unchanged at 0.75-1% per annum. This is stated in the communique on the results of the may meeting of the Federal open market Committee (FOMC).

The decision was made by FOMC members unanimously and coincided with the expectations of the vast majority of economists and market participants.

In the FOMC statement following the meeting of the marked weakening of economic activity in the United States, while in March it was indicated preservation of the moderate pace of economic growth.

Nevertheless, the leaders of the Federal reserve believe the slowdown of economic growth in the first quarter as a temporary phenomenon, and also note the fact that US inflation is close to the long-term target of 2%.

Investors expect the fed’s signals about how the Central Bank will reduce the size of its portfolio of US Treasuries and mortgage bonds. However the fed just confirmed that he intends to maintain a strategy of reinvesting proceeds from bonds.

“Information received since the March FOMC meeting, highlighting the continuing strengthening of the labour market, despite the slowdown in economic activity”, – said in a communique.

“The growth of jobs in the average remained significant in recent months, and the unemployment rate decreased”, – stated in the message.

“Consumer spending rose only a moderate rate, however, the underlying factors supporting the continued growth of consumption, remain strong, noted in the fed. – Business to invest in fixed capital have increased.”

“12-month rate of inflation is about the long-term target of the FOMC is 2%. Consumer prices excluding food and energy fell in March and inflation remains slightly below 2%, – stated in the message of the FOMC. – Market indicators of inflation compensation remains low, most indices of longer-term inflation expectations in General has slightly changed and are balanced”.

The next FOMC meeting will be held on 13-14 June 2017.

US stocks, declining in the environment prior to the publication of the fed’s decision, continue to fall, losing to 0.1-0.6%.

Meanwhile, the dollar strengthened on the outcome of the meeting of the Federal reserve, the yields of US Treasuries are rising. The American currency has risen in the course of trading on 0,2%, to $1,0903, the yield on ten-year US Treasury bonds rose 2 basis points to 2.31% per annum. The price of gold fell 0.5% to $1250,3 per Troy ounce.

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