The Federal Open Market Committee (FOMC) raised no surprises on Wednesday. The US benchmark interest rate unchanged at 0.50 percent. Economic projections were lower in January and the ground point showed a Fed member is expected that 1 hiking rates in 2016 and none in 2017. The biggest problem facing the next Fed monetary policy decision movement is timing . A 25 basis points will not be a global game changer, but it could boost the dollar if the expectation of higher rates down the line. Right now, markets are cheapest for longer, and pushing government bond into negative territory in Europe and Japan.
The statement of the central bank said that the improving labor market has slowed, but was partially offset by growth in economic activity. Consumer spending has increased but business investment was soft. Overall, the same mixed results that were ahead on economic publications. Another piece of information to note is that Kansas City Fed President Esther George joined the squad and did not vote against keeping the rate unchanged in a unanimous vote.
Fed President Janet Yellen added new information during his press conference that were not part of the declaration specifically as a response by a question from a member of the press. She said Brexit is a factor and has been discussed by official as it may have implications to this factor in future decisions by the Fed.
Asked about the FOMC July she mentioned that each meeting is live. The question of the FOMC minutes in April as the main reason for hiking rates in June was even in the cards came, and President Yellen stated that the minutes reflect the discussion of the members in the meeting.
Regarding the US election. President Yellen said that markets should not be surprised by a rate hike before the presidential election. All the time Yellen made sure to impress the public willingness to act by the Fed if economic activity justifies higher rates. press conference or not.
The EUR / USD gained 0.56 percent in the hour after the FOMC statement hit the sons. The currency pair is trading at 1.1269. Patience manifested by the Federal Reserve has put downward pressure on the dollar, although President Yellen made sure to keep the meetings in July and September than the living, even though both have their flaws. July is no press conference, a factor that is important in light of the market reaction to the minutes of April that were released after a meeting, no press conference and were much more information than the simple statement could contain. September secondly a press conference, but its proximity to the presidential elections in November make a risky proposition for the US central bank as any action could be interpreted as biased to a political party.
market events to watch this week:
Thursday, June 16
Attempting JPY BOJ Press Conference
3:30 CHF Libor rate
3:30 CHF SNB assessment of monetary policy
3:30 CHF SNB Press Conference
4:30 GBP Retail Sales m / m
7:00 Votes GBP MPC official discount rate
7:00 monetary policy Summary GBP
7:00 GBP Official Bank rate
8:30 USD CPI m / m
8:30 USD core CPI m / m
8: 30 amUSD Philly Fed Manufacturing Index
8:30 USD unemployment claims
Friday, June 17
8:30 basic CAD CPI m / m
8:30 USD license build
11:00 EUR ECB President Draghi speaks
* All times EDT
for a full list of events planned in the foreign exchange market check the economic calendar MarketPulse
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