Economy

Fed Stands Pat On Rates, Will Reduce Balance Sheet In October

Fed Stands Pat On Rates, Will Reduce Balance Sheet In October”

The Fed said it would begin shedding some of the $4.5 trillion in investments starting next month.

With it being considered aprevious conclusionthat United States interest rates will be left unchanged in September, much attention will likely be directed towards the Fed's forward guidance, for clues on future monetary policy.

For years, the central bank piled up purchases of Treasury and mortgage-backed securities, a strategy meant to stimulate the economy by reducing borrowing costs for everyone.

"The Fed took another step on its path of lovely normalization, announcing that the gradual balance sheet reduction will start next month and limiting revisions to both projections and policy guidance", said Mohamed El-Erian, Chief Economic Adviser At Allianz, in California. As the jobless rate improved, interest rates have been raised, but remain below historic averages. Raising rates too quickly could risk hobbling the recovery. Gross domestic product is now expected to grow at a rate of 2.4 percent this year, 2.1 percent next year and 2.0 percent in 2019.

The central bank expected the Hurricanes Harvey, Irma and Maris to affect USA economy in the near term, but would not alter the course of the economy in the medium term. US stock indexes notched record highs again on Monday, while the Japanese yen and gold weakened.

During the 2008 financial crisis, Washington slashed the key interest rate almost to zero in a bid to boost growth and jobs.

Some analysts thought the Fed might would raise interest rates today because of Chairman Yellen's press conference. But he has also said he is considering other candidates, notably Gary Cohn, head of Trump's National Economic Council.

In addition, the risk that Federal Reserve Chairwoman Janet Yellen "takes a more dismissive line toward the downside surprises in the inflation data" could surprise those expecting a more dovish tilt, wrote Matthew Hornbach, an interest-rate strategist for Morgan Stanley. "I will not say that the committee clearly understands what the causes are".

While the Fed prepares to embark on a form of monetary tightening, some central banks look nowhere near taking their feet off the pedal. A critical question is whether the Fed has grown troubled or confused about chronically low inflation. That's the point at which its benchmark rate is considered to be neither stimulating economic growth nor restraining it.

Fed officials cautioned that they do expect inflation to be higher than normal - at least for a little while - following the hurricanes that have devastated Texas, Florida and now Puerto Rico.

The U.S. dollar rose against a basket of currencies .DXY after the release of the Fed's policy statement.

The central bank also announced it would next month begin cutting back on its holdings of bonds and other assets built up as part of a scheme to keep rates low and steer the economy through the global financial crisis a decade ago. It now projects even faster growth this year of 2.4 percent, an increase from it forecast of 2.1 percent earlier this year.

If Trump chooses not to offer Yellen a second term - or if she declines, if asked - he would be able to name five of the Fed's seven board members in his first year in office.



Like this

loading...
loading...

Latest


23 September 2017
Zacks Investment Research Upgrades Hub Group, Inc. (HUBG) to "Hold"
CCI is relatively high when prices are much higher than average, and relatively low when prices are much lower than the average. BidaskClub raised shares of Hub Group from a "strong sell" rating to a "sell" rating in a research note on Thursday, June 29th.

23 September 2017
Antonio Conte nominated for Best FIFA Men's Coach
In addition to Allegri and former Bianconeri Conte and Zidane , there is Buffon, once again, among the best goalkeepers. FIFA have officially announced the final three candidates for the 2017 Best FIFA Men's Coach award.

23 September 2017
Reserve Bank's close call on interest rate
This could push out the next rate cut into 2018, he said. The rand was supported by inflows into the bond market. The euro was at $1.1986 from $1.1941.

23 September 2017
Miley Cyrus Reveals New Break-Up Single 'Week Without You'
She said: "I don't envision marriage". "People have been asking me, 'is this like a re-introduction of yourself?'" I'm 24. Miley Cyrus has unveiled a new song called " Week Without You ".

23 September 2017
Las Vegas Sands Corp. (LVS) — Hot Trending Stock
Finally, ARGA Investment Management LP increased its position in shares of Las Vegas Sands Corp.by 110.7% during the 2nd quarter. Wells Fargo & Company reiterated a "neutral" rating on shares of Las Vegas Sands Corp.in a research note on Tuesday, July 4th.

22 September 2017
Do Shares Price Show Moderate Volatility? Oracle Corporation (ORCL)
On average, equities research analysts anticipate that Oracle Corporation will post $2.93 earnings per share for the current year. ETF Managers Group LLC acquired a new position in Oracle Corporation during the second quarter valued at approximately $133,000.

22 September 2017
Find and watch movies with 4K, HDR, or Dolby Vision
Last month, it was reported that Apple and movie studios weren't seeing eye-to-eye when it comes to pricing 4K movies on iTunes . The Apple TV's Siri Remote looks nearly exactly the same as its predecessor, but its menu button has a raised white ring.

22 September 2017
Amicus Therapeutics, Inc. (FOLD), Ironwood Pharmaceuticals, Inc. (IRWD)
You can get a sense of how sustainable that is by a levered free cash flow of $-168.26 Million over the past twelve months. The consensus rating is 1.5, indicating analysts in general look favorably on the company's future prospects.

22 September 2017
Brokers Change Their Target Price On Red Hat, Inc. (NYSE:RHT)
The Maryland-based Chevy Chase has invested 0.12% in SunTrust Banks, Inc. 1St Global Advisors invested in 0.28% or 31,747 shares. After $0.40 actual EPS reported by Red Hat Inc for the previous quarter, Wall Street now forecasts 17.50 % EPS growth.

22 September 2017
Fire damages Scorpions Motorcycle Club barn in Lyon Township
A fire has damaged a barn belonging to the Scorpions Motorcycle Club northwest of Detroit in Oakland County's Lyon Township. According to the fire department, the fire was in a bar on the property of the Scorpions Motorcycle Club on Milford Rd.