Thursday, September 22, 2016

Federal Reserve: the US Central Bank leaves key interest rate untouched – Handelsblatt

Federal Reserve

The US Central Bank does not interfere with the base rate for the time being.

(photo: Reuters)

Washington/New YorkThe U.S. Federal Reserve in monetary policy with great caution. The base rate for the largest economy in the world remains unchanged in a Target range of 0.25 percent to 0.5 percent, as the decided to open-market Committee of the Fed on Wednesday at its September meeting. The Committee sent, however, clearly signals for a rate hike in December. The Fed had increased the interest rate last in December 2015. Ahead seven years, a rate close to the zero line.

It is the sixth interest rate decision in a row, the US Central Bank does not affect your interest rate. The ten members of the Federal open market Committee were not in agreement. The Fed had signaled the end of 2015, you could screw in 2016, up to four Times the Interest rate. Instead, there will be a maximum of one interest rate move this year.

disagreement among the Fed members

Five participants agreed with Fed chair Janet Yellen and her Deputy, William Dudley against an immediate interest rate increase. Three members, Esther George, Head of the Fed of Kansas, Loretta Mester, Head of the Fed of Cleveland, and Eric Rosengren, the chief in Boston, however, voted against the decision. Would you have wished for an increase of a quarter of a percentage point to a range between 0.5 and 0.75 percent. Rosengren had recently warned of an Overheating of the market for commercial real estate, which is, in his opinion, the result of long-term low Central Bank interest rates.

“The investments in the economy remain soft, both in the energy sector and beyond,” said Yellen. In the energy industry, there are signs, however, of the drilling activities anzögen slowly. The Inflation remained in the past twelve months, with less than 1 percent, significantly below the target of two percent. “But we expect that the target will be reached in the next two to three years,” Yellen said.

“We are less than seven weeks from the election. In the case of the mixed signals from the markets, the Fed has gone very clearly on the safe side," said Dennis de Jong from Online Broker A moderate increase is expected after the US presidential election. The first opportunity would be in December.

interest rate decision from the Fed: stock market expert: “Inflation is now coming.”

“The arguments for an interest rate increase more,” it said in a communication to the Fed. However, the Committee wool wait until the signs that the economy developed in the direction of your target, to solidify.

investors responded a little surprised. “The markets have already increase is largely a Interest rate in December priced in,” said Mike Read from the dealer network, Pelican, London. He feared, however, that the “climate of uncertainty” will be in the coming months, even more intense, because of the “Brexit”negotiations between the UK and the EU. The rate of the Euro grew only at times a little, and reached a daily high at 1,1197 US Dollar. Most recently the community currency, but again hardly changed. The U.S. equity markets, the interest rate spurred the decision only briefly. The Dow-Jones Index of the default values listed or traded 0.4 percent higher with 18.208 points. The broader S&P 500 was 0.6 per cent in the Plus at 2152 meters. The Index of technology exchange Nasdaq tended to be higher in 0.5 percent strength at 5266.

As the Economist Michael Feroli of JP Morgan writes, the Fed is largely as expected: “they had increased in the last December for the first Time since the financial crisis, the key policy rate from near-Zero in the range between 0.25 and 0.5 percent. It stresses, as in previous months, that they will also increase the long-term interest rates only in the very long term." The Chicago Economist Randall Kroszner expressed on Tuesday in an Interview with the Handelsblatt is the expectation that the Fed could raise in about three years, its key rate up to three percent.

Central banks and negative interest rates

  • Rate of the main refinancing operations (interest rate): 0.0%

    Deposit interest rate for banks: -0.1%

  • set the main refinancing operations (interest rate): -0,75 percent (15.01.2016)

    Deposit interest rate for banks: -0,75%

  • set the main refinancing operations (interest rate) staggered: 0.05 percentage

    Deposit interest rate for banks: Down 0.65 percent

  • set the main refinancing operations (interest rate): -0.5%

    Deposit interest rate for banks: -0.5%

  • set the main refinancing operations (interest rate): 0.0%

    Deposit interest rate for banks: 0.4%

had surprised The Bank of Japan (BoJ) before the stock markets with a new framework: Instead of your solid state to extend bond purchases, continued to the Central Bank a new long-term interest rate target. The interest rate is to be kept on ten-year Japanese government bonds at around zero percent – the policy of cheap money in the third largest economy in the world so for a long time. Your Penalty rate of minus 0.1 percent tighter but not.


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