Fed shows patient – base rate remains unchanged

The US Central Bank, the Federal Reserve has left the key interest rate unchanged, and a very cautious interest rate in the further course of the year indicated. The arguments for further increases in the Prime rate would have "weakened," said Central Bank chief Jerome Powell on Wednesday in Washington. The Fed wool staking their future course, "patient".

With its first interest rate decision of the year, the US Central Bank left the key interest rate in a corridor between 2.25 and 2.5 per cent. This came as no surprise. The Fed had already announced in December, in the year 2019, only two interest-rate increase, target steps, after four increases in 2018. The current statements of the Central Bank indicate that, even possibly two interest rate increases in question.

The Fed proclaimed "patience" was greeted in the markets with joy. In New York the Dow Jones rose immediately after the Fed statement by 1.8 percent to 25.021,58 points.

risk of high Inflation

Powell declined the reluctance of the Central Bank reasoned, among other things, that the risk of Inflation had decreased. He pointed to the recent decline in Oil prices. Interest rate is the Instrument of the Central banks increases, the price increases to curb.

The Fed announced but also, she wanted to decide on their future course, "in the light of the global economic and financial developments". A further upturn in the economic performance and the labour market in the USA is the "most likely outcome". But the Fed wants to be waiting "patiently for more clarity" about the risk factors , such as the Brexit , the trade conflict between the United States and China, as well as the ongoing US budget dispute, explained Powell.

Fed chief warns of "hard" Brexit

A hard Brexit would cause "disruptions" in the U.S. economy, warned the Central Bank chief at a news conference: "We would feel it." The US budget dispute, he, ended last Friday said that five-week "Shutdown" will have any long term effects on the U.S. economy. However, a second "Shutdown" would have, in his words, a "permanent effect".

The Fed's announcement is likely to be taken up by U.S. President Donald Trump with satisfaction. He had attacked the Central Bank in the past year because of their rate increases several times sharp. "The only Problem our economy has is the Fed," he said at the end of December.

The blatant criticism of the President, the Fed was highly unusual, since the Bank is independent from the White house to act. Powell, in turn, had stressed the "objectivity" and "independence" of the Central Bank. Powell in February of 2018 in the office. He had been promoted from Trump to the Post.

(oli/sda)

Created: 30.01.2019, 23:13 PM