Moscow. June 14. INTERFAX.RU – Federal reserve system (FRS) the USA following the meeting on June 13-14, decided to raise the target range of interest rates on Federal loan funds (federal funds rate) by 25 basis points to 1-1. 25% per annum, said in a communique on the results of the June meeting of the Federal open market Committee (FOMC).
The FOMC decision came in line with expectations of the vast majority of economists and market participants. The fed still expects one more, the third rate hike in 2017. In addition, the fed plans to begin reducing the assets on the balance sheet, which after the stimulus programs amounted to $4.5 trillion, this year.
Currently, the US Central Bank reinvests income from US Treasuries and mortgage bonds at their maturity. According to the plan, the fed will start to reduce the amount of reinvestment the principal amount of debt securities of $6 billion in the month due to U.S. government bonds, for which the maturities. Each quarter during the year this amount will increase by $6 billion until then, until you reach $30 billion per month. For mortgage-backed securities and debt obligations of various state organizations, States the initial amount of $4 billion a month, every quarter it will increase by $4 billion per month until it reaches $20 billion per month.
Currently on the balance sheet of the us Central Bank are US Treasuries with a total value of $2.5 trillion and mortgage bonds worth $1.8 trillion. While the fed did not specify what amount wants to reduce these investments, noting that the details will become clear as the implementation of the plan.
In the case of weakening growth of the US economy, the Central Bank may resume to reinvest the principal amount in full or even to increase the volume of assets on the balance sheet. In the statement and the forecasts of the leaders of the fed noted the moderate growth of the US economy, the assessment of inflation (the PCE index) for 2017 drastically reduced from 1.9% to 1.6%.