Positive outlook on growth stays hand of US Federal Reserve
June 19, 2014 3:17 am
The Federal Reserve professed their belief on Wednesday that the US economy will continue to expand this year as they proceed in their direction of maintaining interest rates and tapering off asset purchases.
Among those specifically cited by Chair Janet Yellen as an indicator of the health of the world’s largest economy was the latest jobs data for the month of May that had unemployment at a six year low of 6.3%. Along with this was the period of four straight months leading to May when each month added over 200,000 to payrolls, a feat has not been seen in almost a decade and a half.
To jumpstart employment in the country, the central bank had originally undergone three rounds of bonds buying to keep the costs of long term borrowing low. Purchases of assets are now being reduced by $10 billion every month to the current $35 billion. So far, this has given the Fed a balance sheet of $4.34 trillion, a size that Yellen looks to hold at a similar level.
The Fed has also expressed that markets will not see any interest rate hikes until a considerable amount of time has passed from the eventual end of buying. Despite having no definite timetable for any increase, bank officials predict that interest rates will end up at 1.13% by the end of next year and 2.5% by the end of 2016.
Yellen acknowledged an area of possible concern for the US recovery should inflation levels persist below their 2% target. To measure this, the Fed uses the personal consumption expenditures index which rose by 1.6% in April from the year before, signifying that prices are slowly moving towards their objective. A different measure in the consumer price index, meanwhile, went up 2.1% in May
The central bank maintained a rosy outlook for the country’s overall growth saying that it will grow by at least 3% in each of the remaining quarters this year.
The material has been provided by InstaForex Company – www.instaforex.com
The Federal Reserve professed their belief on Wednesday that the US economy will continue to expand this year as they proceed in their direction of maintaining interest rates and tapering off asset purchases.
Among those specifically cited by Chair Janet Yellen as an indicator of the health of the world’s largest economy was the latest jobs data for the month of May that had unemployment at a six year low of 6.3%. Along with this was the period of four straight months leading to May when each month added over 200,000 to payrolls, a feat has not been seen in almost a decade and a half.
To jumpstart employment in the country, the central bank had originally undergone three rounds of bonds buying to keep the costs of long term borrowing low. Purchases of assets are now being reduced by $10 billion every month to the current $35 billion. So far, this has given the Fed a balance sheet of $4.34 trillion, a size that Yellen looks to hold at a similar level.
The Fed has also expressed that markets will not see any interest rate hikes until a considerable amount of time has passed from the eventual end of buying. Despite having no definite timetable for any increase, bank officials predict that interest rates will end up at 1.13% by the end of next year and 2.5% by the end of 2016.
Yellen acknowledged an area of possible concern for the US recovery should inflation levels persist below their 2% target. To measure this, the Fed uses the personal consumption expenditures index which rose by 1.6% in April from the year before, signifying that prices are slowly moving towards their objective. A different measure in the consumer price index, meanwhile, went up 2.1% in May
The central bank maintained a rosy outlook for the country’s overall growth saying that it will grow by at least 3% in each of the remaining quarters this year.
The material has been provided by InstaForex Company – www.instaforex.com
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