U.S. Federal Reserve System interest-rate decision

Economy Nilgun Salim
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The Chair of the Board of Governors of the Federal Reserve System Janet Yellen postponed the rise for the interest rates, a move probably followed by other central banks around the world, in order to provide more room for growth, writes Bloomberg.

The FED Chair admitted serious chances to report a rise in U.S.’ economy for this year and postponing an increased interest rate seemed like an obvious move in order to achieve that. Increasing the interest rates was also annulled due to some worrying signals in the labor market.

‘The economy has to recover a lot more than we initially thought’, said Yellen during a press conference in Washington.

The decision regarding the interest rates was no taken unanimously. Apparently, three FED members wanted to increase them, but this has not happened since December 2014.

The decision comes after the Republican candidate Donald Trump accused FED of deliberately keeping the interest rates low, in order to help Barack Obama to increase his popularity during his last year as president.

According to official data, the current inflation rate in U.S. is 1,6%, below FED’s target of 2%. If the situation on the labor market continues to improve and signs of significant risks are missing, we expect a significant rise in the interest rate. The short-term risks regarding the economy seem pretty balanced. The next FED meetings are scheduled on November 1 and 2 and December 13 and 14.

Stock prices initially extended their gains after the Fed announcement but then lost some ground.