We asked two scholars and former Fed officials – Mark Sniderman, an executive in residence at Case Western Reserve University who was chief policy officer at the Cleveland branch of the central bank, and Emory University’s Sheila Tschinkel, who was director of research in Atlanta – whether it was the right call.
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SINGAPORE/SYDNEY Asian shares rallied on Thursday, taking their cue from Wall Street, after the Federal Reserve left US interest rates unchanged and slowed the pace of future hikes, knocking the dollar and lifting commodity prices.
“I can say emphatically that partisan politics plays no role in our decisions about the appropriate stance of monetary policy”, Yellen said.
The rallies began after the Fed on Wednesday maintained the low-interest rate environment that has helped underpin the bull market for stocks since the global financial crisis in 2008.
“Well, it’s [the interest rate] staying at zero because she’s obviously political and she’s doing what Obama wants her to do”, Trump said in a September 13 interview with CNBC.
Yellen said the differences inside the FOMC mainly came down to the timing of rate increases, not to whether they should be carried out.
FED TIME: This afternoon the Federal Reserve wrap up its latest meeting on interest rates. Brainard’s comments, coupled with a string of weaker-than-expected economic data, led watchers to conclude that there will likely be no rate increase this week. Homebuilders famously protested former Fed Chair Paul Volcker for hiking rates by sending him 2×4’s in the mail, even though the increases were created to tame troublesomely high inflation.
Yellen stressed that the USA economy is progressing, close to a sustainable unemployment rate below 5 percent and in time the inflation rate is expected to rise to the Fed’s 2 percent goal.
In addition, most FOMC members expect the US economy to continue expanding at a rate consistent with its potential growth rate.
The Fed strongly signaled it could still tighten monetary policy by year-end, and as of Thursday afternoon traders set the probability of a hike at the Fed’s December meeting at 58 percent, according to the CME Group’s FedWatch website. That speculation was primarily based on two board members remarking that perhaps now is the time to raise rates again. The median forecast was at 1.875% in 2018 and 2.625% for 2019.
Former Fed official Jonathan Wright backed Yellen’s decision to give the economy more leash. In the end, Rosengren was one of three Fed voters who wanted to raise rates Wednesday.
Three members on the committee dissented and called for an immediate rise in rates.
The official exchange rate of Azerbaijan’s national currency, the manat, against the U.S. dollar was set at 1.6331 for September 22, said Azerbaijan’s Central Bank (CBA) on September 21.
Economists expect the Fed will stand pat, keeping the short-term interest rate it controls between 0.25 percent and 0.5 percent. “With regard to the outlook, sluggishness is expected to remain in exports and production for some time, and the pace of economic recovery is likely to remain slow”, it said.
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San Francisco Fed President John Williams said at a meeting of the Council on Foreign Relations earlier this year: “On our full employment mandate, we are basically there”.
