The Fed Keeps Its Rate Unchanged

In its decision not to increase its interest rates, the Fed simply suggests that it prefers to act later than too early. It still has the feeling, particularly with regard to the global environment and the risk associated with it, it’s a bit too early. A shock to the global economy could change the profile of the US economy and the Fed does not want that. It prefers that the trajectory of the economy is more robust. In other words, even if it considers that the economy is robust, it does not make the assumption that it is a sufficiently strong and stable trajectory to withstand a  marked shock from the outside.
The low rate of inflation and expectations of a slower convergence towards the target of 2% account for a large share of the Fed decision. In fact, there is still no pressure on the productive apparatus and thus there is no reason, for the US central bank, to rush into the tightening of its monetary strategy.

Will these conditions have changed in December? Or will it be necessary to wait until 2016? It is too early to say but the Fed seems in no hurry to act.
(13 of the 17 members of the monetary policy committee expect a higher fed funds rate at the end of this year. Nevertheless, at the end, it’s Janet Yellen who decides)

1 thought on “The Fed Keeps Its Rate Unchanged

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s