CB: the market should comprehend the sudden signal the fed’s plans for 2016

CB: the market should comprehend the sudden signal the fed’s plans for 2016

The US Federal reserve’s decision about raising the basic interest rate to 0.25 to 0.5% came as a surprise to the Bank of Russia. Clear goal setting requires rethinking, said the Chairman of the Central Bank Sergey Shvetsov.

MOSCOW, 17 Dec. The CBR did not expect such a clear signal from the fed plans rate hike in 2016, the market should reflect this, said the first Deputy Chairman of the CBR Sergey Shvetsov.

On Wednesday, the fed at the end of another meeting raised the benchmark interest rate to 0.25 to 0.5%. As stated by the head of the regulator Janet Yellen. The fed plans to increase the base rate to 1.5% in 2016 and 2.5% in 2017, but it will depend on the economic situation.

“The most interesting, probably, the decision is not what was raised the rate by 0.25 basis points, and that there were comments indicating that a further 1 percentage point for 2016 the interest rate will increase,” — said Shvetsov at session of the XI International REPO forum.

“It was unexpected, to be honest, for me that would be given such a clear signal,” he said. “The Federal reserve remains true to its goal of achieving balance between inflation, unemployment and growth, and that clear goal setting requires rethinking. Really the market it has not yet comprehended”, said Shvetsov.

“What we are seeing on the dynamics of foreign currencies and stock and bond said that on the one hand, unexpectedly that the fed will clearly raise, on the other hand is a commitment that the rate will not grow faster,” he said.