the Us Central Bank raised interest rates by 0.25 percentage points. The main rate is now in the range of 0.5-0.75 per cent. This was the first increase of the year and the decade. Most likely, the next will not have to wait so long. The decision is important not only for the United States. Effects feel also in Poland.
Update 21:45
in accordance with the forecasts of most economists, the Fed decided to increase interest rates at the Central Bank. Federal funds rate increased from 0.25-0.5 percent. to 0,5-0,75%. Last time at this level was in late 2008. Later for many years was a record low does not exceed 0.25 per cent. Only a year ago the decision was made for a breakthrough.
“Given the documented and expected conditions in the labor market and inflation, the Committee decided to raise the target range of interest rates”, – stated in the message.
the Fed stressed that monetary policy after this decision still has the character of an adaptive, supporting further improvement in the labour market and return to 2%. of inflation.
the Fed began a process of “normalization” of monetary policy a year ago, in December 2015. Why it means to return to a normal life? Zero interest rates spoil the money, doing that he is too easily accessible. As a result, caused, in particular, the growth of prices. On the other hand, to stimulate investment and economic growth, after the crisis of 2008 and the fall in particular Lehman Brothers, brought positive results.
the Fed was late up. Originally referred to several such movements this year. Even four. It turned out that the only campaign took place only at the end of 2016. Due to the fact that it has been so long expected, the market was estimated more than 90 percent. So there is no surprise.
however, it is gaining against the Euro and gold. However, it has unexpected ads a greater number of consecutive increases in the next year. Read more about the reaction of the currency market we are writing in the text: “the Fed is tightening policy and promises another increase. The dollar is growing from strength to strength”.
When is the next promotion?
the biggest mystery ahead of the announcement of the Fed was another movement on the part of the U.S. Central Bank. Economists are two campaigns in 2017 and three in 2018. This means that in two years the interest rate will reach 2%.
- Offer more aggressive strengthening at risk building and that the Fed sees a need even before I learned the details of projects fiscal Donald trump commented before the decision was announced by Conrad White, an analyst at TMS Brokers. Pay attention to the fact that the Fed has no interest in prowokowaniu markets for proactive inflating the cost of credit and reduce the competitiveness of U.S. companies through the strengthening of the dollar.
- the Strategy of “wait-and-see” or confidently: “wait and see” seems to be a reasonable approach, – said White.
it Turned out, however, that next year we should see 2-and 3-fold increase in interest rates at the Central Bank. This is facilitated, in particular, adjusted upwards the economic growth forecast for the US this year and for the period 2017 and 2019, while the downward correction to the forecasts of the unemployment rate during the same periods of time.
Investors are watching with attention to all messages related to interest rates because they have value for their money. The General principle is that the higher the cost of money affects the valuation of shares of companies on stock exchanges. This increases the value of local currency.
What the Fed decision can mean in a broader context? Rising interest rates may lead to capital outflows from emerging markets, i.e. in particular from Poland and sail a wider stream in the United States. Besides, it will mean an increase in the cost of borrowing money in the largest economy in the world, which is not conducive to local companies that will to pay more for a loan for the development of money. This is both bad news for consumers who will have difficulties to access Bank financing.
Very different policies in the US and Europe
Attention to a completely different approach to monetary policy in the US and the Old Continent. When the Fed again raises interest rates, the European Central Bank main rate at zero. Moreover, the Deposit rate at minus 0.4 percent.
In addition, economic growth in the Euro area is artificially inflated, in part, by monthly to buy bonds worth 80 billion euros that have poured in the market. And instead of a reduction of QE as it was done by Americans in 2013, to week, the ECB announced that it will extend until the end of next year. Originally he was supposed to finish in March 2017.
Started the process of raising interest rates in the US and is extremely “loose policy” of the ECB are reflected in the foreign exchange market. The Euro since mid-2014 systematically loses value. Two and a half years ago was worth 1.40 USD. Currently, the rate is not greater than 1.10. At the same time, was even lower to 1.05, the lowest since 2002.
Economists are increasingly and more boldly speak about the conformity of the Euro and the dollar, that is zrównaniu values of both currencies, which would mean that the EUR/USD is equal to exactly 1. It is, in the opinion of currency expert Martin Kiepasa bad scenario for gold, which can weaken against the U.S. dollar to the level of 4.40 PLN. Thus, the high level of the exchange rate was only a few months in 2000. Later didn’t happen. Moreover, there was a period that the dollar could be bought for 2 UAH.
the fed began a process of “normalising” monetary policy in 2015, when after several years of quantitative easing has raised the rate on Federal funds. Despite the announcements of several hikes in 2016, the fed he was dying of investors before the end of the year
No comments:
Post a Comment