The results of the US Fed meeting were released yesterday without a significant change on the results of the last meeting which was held during this year 2014. Janet Yellen, the president of the American Federal Reserve Bank, announced in the press conference after the Monetary Policy Committee statement that “the new tone does not represent any change in our policies and is fully compatible with our previous approach”. Also, the FOMC announced the monetary policy statement saying that it will be careful in making a decision to raise the interest rates, and that the interest rates will remain at zero region for a temporary period. Besides, the Committee added that it sees a significant improvement in terms of the US labor market, as the unemployment rates were the most important reserve fears in the last period. However, the Fed still sees that the inflation rates are below the target so far, and regarding this, the FOMC announced that it would monitor the inflation closely. With expectations that the inflation will rise gradually, and that the challenge now is the inflation with the interest rates staying at the zero region between 0.00% and 0.25%, and from this data, the Fed’s vision, about raising the rates by the middle of the next year 2015, is optimistic amid the improvement of the US economy, especially the labor market.
And the drama, which we expected from the US Federal Bank, is a scenario that did not address or mention anything about the faltering of the global markets caused by the continuing decline in oil prices, and also did not address to the Russian economic crisis caused by the collapse of the Russian currency (ruble) to record historical levels.
The estimates released by the US central bank officials showed that the main interest rate will reach 1.125% at the end of the coming year, compared with the average of the previous forecast in September at 1.375%, with the knowledge that the central bank kept the interest rates near zero since 2008, and has not raised it since 2006. Moreover, the projections indicate that the interest rate will be at 2.5% at the end of 2016 and at 3.625% at the end of 2017.
The Fed also explained in its statement that the average of the unemployment rate will range between 5.2% and 5.3% during the last quarter of the next year, compared to the previous estimates, which were released in September at 5.6%, adding that the unemployment will range between 5% and 5.2% in 2016, and between 4.9% and 5.3% in 2017.
With regard to the growth, the central bank forecasts that the growth in the long term will range between 2% and 2.3%, which are the same estimates of last September, and expecting the US GDP to rise at a rate ranging from 2.6% to 3% in 2015.