The Federal Reserve Anticipates Rising Interest Rates After April

Posted On 20 Mar 2015
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Tag: Federal Reserve increasing interest rates,

The Federal Reserve (Fed) on Wednesday removed the word “patient” in its statement at the end of its two-day meeting on monetary policy in the US, which means that the imminent rise in benchmark interest rates will be discussed at each meeting and may occur in June.

In the document, the Fed said it looks unlikely that the increase of money occurs in April, so this would be postponed as early in June, reveals Efe.

The president of the Federal Reserve Janet Yellen said the withdrawal of the “patient” word statement does not mean that the Fed has become “impatient” to a rise in interest rates.

He added that no decision on a timetable on the first rate increase since 2006, but added that it could take place in “any meeting” after the April if conditions warrant.

This indicates that the first rise in interest rates after the crisis must not necessarily be at the June meeting, but cannot be ruled to be on that date.

Furthermore, 15 of the 17 members of the Committee consider that interest rates should begin to rise this year, while the other two believe that the first increase should be in 2016.

In addition, 3 of the 17 members indicate that rates should not exceed 1% at the end of 2015. In the long run, all participants in the meeting of the Fed least one argue that rates should be between 3.5% and 4.25%.

In recent meetings of the Open Market Committee of the Federal Reserve, the final communiqué always claimed that “patient” kept to an anticipated rise in interest rates.

Regarding the economic situation, the Fed noted that information received since its last meeting in January suggests that economic growth “has slowed somewhat,” while inflation remains below its target of 2% in the long term due in part to falling energy prices.

It also stressed that labor market conditions improved, with solid gains in employment and a lower unemployment rate.

It also notes that household spending is raising “moderately”, thanks in part to lower oil prices, while advancing business fixed investment. Instead, the housing recovery remains sluggish and exports have weakened.

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