Fed rate hike by year-end. The close will be slower and less … – Il Sole 24 Ore

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This article was published June 17, 2015 at 21:11.
The last change is the 17 June 2015 at 21:13.

The US economy does not change course. This is the message that the Federal Reserve, announced in June as in that, more uncertain, in late April, wanted to launch: the ugly first quarter, when the GDP fell by 0.7%, was only an episode transient. It is not true, however, that the prospects for monetary policy remained the same. The rise in interest rates will be slower and less intense.

It is surprising a bit ‘in the material published by the Central Bank of Washington, the distance between the words of the press, who continue to draw a growing economy moderate though – this is the most important innovation – with “private fixed investment and net exports remained weak” and predictions about future policy rates.

The seventeen governors of the Fed, every three months, it should indicate what the expected level of official interest rates at year-end, and the end of the next two years. New Products For June are remarkable. In March, four central bankers thought that the cost of the loan would have passed in December 2015, one per cent; Now anyone. The average rate of year-end planned by the Fed fell at 0.20 percentage points at 0:55 (although the median has remained steady at 0.675%). Today the Fed Funds Rates are at 0-0.25%.

The changes also extend to 2016 and 2017. Three months ago three Governors believed that rates of end of 2016 would be above the 3%; Now anyone. The expected average rate fell by 0.25 percentage points, to 1.75% (and similarly, the median rate fell dall’1.875 all’1.625%). A similar decline in the forecast is repeated for 2017: nine governors that link to rates ranging between 2 and 3%, while there were only six in March. The average rate rose to 3% from 3.18% (the median to 2.875% from 3.125%).

The effects this are immediate. Even if the Fed keeps saying – as it did yesterday President Janet Yellen – that the trend rate will simply be the result of decisions taken at each meeting, each independent of the other, the approach is now toward a rise less intense and less rapid than you imagined three months ago.

It is a conclusion that says nothing, however, on the date of the first rise, which could still be close enough: fifteen governors think that could happen later this year, as in March. “Let me stress that the importance of the initial rise should not be exaggerated, it’s September, December or March,” he however said the President, adding that “the stance of monetary policy is likely to remain very expansive ( accommodative , in English, ed) for some time after the initial rise. ” The decline of the dollar that has accompanied the decision is justified and then, however limited, may reveal a change in the investment strategies.

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