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Important news from the US Federal Reserve System

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Important news from the US Federal Reserve System
May 04
09:00 2017

Last night, a communiqué, in which you can find information about the results of the two-day meeting of the US Federal Reserve, was issued. All members of the FOMC voted to maintain the current interest rate on federal loans, so the size of this important indicator of the state of the US economy will remain at 0.75-1% per annum. The decision did not come as a surprise to experts and analysts, most of them predicted exactly this scenario.

Also, it became known from the minutes that the pace of the economic growth in the USA had not met expectations. A more expressive increase in the pace was expected. Experts do not see this as a tragedy, reassuring the public with the fact that the slowdown is temporary and will not last long. Investors were pleased with the fact that the inflation in the United States had approached 2%. This is exactly the level that the Fed took for a long-term inflation targeting. The FOMC statement says that the market indices of inflationary compensation remain low; most indicators of the long-term inflation expectations have changed little and are balanced.

The continuation of the Fed’s more than ever positive report is one on the current state of the labor market. The Fed states that the labor market shows a tendency to strengthen even against the backdrop of the slowdown in the economic growth. In practice, the phrase “tendency to strengthen” for the labor market means an increase in the number of jobs and decrease in the number of the unemployed.

The logical consequence is the strengthening of the US dollar on the results of the FOMC meeting. The yield of the ten-year US Treasury bonds has also grown, but the US stock indices have kept the tendency to fall.

The next time the meeting of the US Federal Reserve System will be held on June 13-14, 2017. Analysts have not formulated their forecasts for its results yet.

The material was prepared with the participation of  Vladimir Haritonov,
a leading analyst of the brokerage company CTTrade

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