Federal reserve Bank of San Francisco predicts that U.S. inflation will return to within the target of two percent, so it makes sense to gradually move away from current practices of stimulating the economy.
MOSCOW, 8 Nov. The increase in the interest rate, given the approach of employment and inflation to the maximum level, is the logical next step, said the head of the Federal reserve Bank of San Francisco John Williams.
The Federal reserve (the fed) last raised the base rate 29 June 2006. In 2007-2008, the regulator gradually reduced rate until, until it reached the lowest level of 0-0. 25% in December 2008. Low interest rate, according to the expectation of the regulator that was supposed to stimulate production, to send money to the real sector of the economy and help the U.S. recover from the crisis.
“My prediction is that in the near future we will reach the maximum level of employment, and I am increasingly confident that inflation will return to within the target of two per cent, Williams said, quoted by Reuters. — Thus, it makes sense to gradually move away from the practice of stimulation, due to which we are now to where we are”.
In late October the U.S. Federal reserve once again kept its base rate at a minimum level of 0-0. 25%, as analysts expected. While the regulator did not rule out a rate hike in December, depending on the dynamics of key macroeconomic indicators — employment and inflation. The next meeting of the Committee on open markets FRS will take place on 15-16 December.
Earlier in the review of the International monetary Fund (IMF) has noted that an increase in the base interest rate may lead to increased economic instability in the U.S. and in the world.