The Fed left interest rates unchanged between 0.25 and 0.50%. Yellen: “appropriately cautious approach” – The Republic

In line with market expectations, and analysts, the Monetary Policy Committee of the Federal Reserve left interest rates unchanged. The cost of money remains stationary in a fork between 0.25% and 0.50%. This is the fourth time in a row that the US central bank decided not to proceed with further monetary tightening after that of last December 16, when it was announced the first increase since June 2006. Until that time the rates were steady at a record low equal to 0-0.25% since December 2008.

to alter the decision, as well as internal data on the US economy (the last employment were defined by Janet Yellen “disappointing”), there is above all the ‘waiting for the referendum on Brexit scheduled for June 23: it is feared that an exit of Britain from the European Union would cause an earthquake in international markets.

the Federal Reserve has filed its growth forecast of the US GDP for 2016 and 2017. According to the median projections of the central Bank, the US growth should be around 2% in 2016, the Fed estimated a GDP to + 2.2% in 2017 and 2018. in March this year, to 2.1% next year and + 2% in 2018.

the US central bank also signaled that it plans two more increases in the cost of money in the course of 2016, saying that the labor market should be strengthened after the recent slowdown. For the time has not been given any indication on the timing of increases even if the projections leave the door open to a close next month.

“A cautious approach to monetary policy is appropriate,” said Yellen. “The economic slowdown in part was not expected, recent economic indicators have been thwarted. There continue to be vulnerable worldwide.” The Brexit was one of the uncertainties that have been discussed today. The vote in the UK can have economic and financial market consequences. “The trend in interest rates and the pace of future increases” it is not on a predetermined way “and the cost of borrowing is likely to remain” below levels of longer-term for a certain period “continued Yellen. in particular, the Fed will continue to monitor progress in terms of inflation, which should” go back to the 2% target over the next two or three years. ” Yellen also explained that “the progress of the labor market has slowed markedly,” but stressed that “it is important not to overreact” to the employment data (in May were created far fewer jobs than expected job , less than 40 thousand). the number one the Fed said that “the slowdown in some parts of the economy was unexpected”, but the Fed continues to expect “a gradual increase in interest rates over time.”

Wall Street reacts smoothly to the decision of the Fed: the Dow Jones rises 0.21% to 17,711.87 points, the S & amp; p 500 advancing 0.22% to 2,079.96 points and the Nasdaq shows a increase of 0.28% to 4857.19 points.

Topics:

GDP

Fed

federal reserve

cost of money

Use rates

brexit

referendum brexit

USA

Starring:

Janet Yellen