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Saturday, 20 October 05:50 (GMT -05:00)

Stock and commodities markets

Market Reaction to Zero Change in Fed’s Rate


The Fed’s decision to preserve the key interest rate unchanged at 1,25% has had a positive impact on American and international markets.


The recent 2-day FOMC meeting resulted in the decision to avoid any interest rate changes this time. For those of you who don’t know, the Federal Reserve has already raised the key interest rate twice this year. The first interest rate hike took place in March, when the central bank raised it from 0,75% up to 1%. The second one took place in June, when the central bank raised it from 1% up to 1,25%. In 2015 and 2016, the Fed raised the rate once a year. The next FOMC meeting is scheduled for December 2017.
The FOMC members state that the U.S. labor market is currently strong while the economic activity is at the stage of moderate growth. their long-term inflation expectations haven’t changed since the last meeting. This year, consumer inflation is not going to exceed the 2% threshold. As for the U.S. GDP forecast, it was raised from 2,25 up to 2,4% during the FOMC meeting. The unemployment forecast remains unchanged at 4,3%.
In response to the Fed’s decision, the stock indexes started growing and reached major highs. For instance, the Dow Jones Industrial Average reached 22412,59 points (+0,19%). S&P 500 reached 2508,24 points (+0,06%).
At the same time, oil prices slowed down their rally and retraced a bit after the FOMC meeting minutes were released. Brent and WTI slowed down form 2,23% and 2,02% down to 1,85% and 1,38% respectively. At the same time, the U.S. Dollar resumed its rally against other financial assets.



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Publication date: 16 January 01:49 AM

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