Translated material
Stimulation will follow
The Fed has reached a consensus
The US Federal Reserve System (FRS) left the base minimum rate at 0--0.25% per annum, as experts expected. Moreover, the Central Bank again made it clear that it is ready to resort to additional stimulus if necessary. Stock markets were not inspired by this statement; the dollar continued to fall against the euro. On the Russian market, the European currency rate jumped by more than 50 kopecks, above the 41 ruble mark.Although the American economy is recovering slowly, the regulator refrained from making specific decisions to stimulate the economy, declaring its readiness to use additional monetary policy instruments if necessary. However, according to The Wall Street Journal, the Fed's statement shows that a consensus is gradually emerging among management regarding the need for action to stimulate growth.
The Central Bank also made it clear that it began to pay more attention to inflation, which was below the target corridor. Most Fed leaders are guided by a consumer price growth corridor of 1.7-2%, some believe that 1.5% is acceptable. Meanwhile, the core consumer price index fell to 0.9% in August, threatening the US with the kind of deflation that has crippled Japan's economy.
According to New York University economist Mark Getler, too low inflation could lead to a further slowdown in the economy, increased risks of deflation, or large-scale declines in prices for a number of goods. “Low inflation is a clear signal that the authorities are going to do something, in particular buy more securities,” an economist at LPL Financial Corp. told Bloomberg. John Kanally. He reminds that the next Fed meeting will take place on November 2-3: “Over the next six weeks, markets will constantly ask themselves how much money they are going to inject and will it work?”
Amid uncertainty, European stock markets fell yesterday. Quotes of banks Barclays, UBS and Banco Santander fell by 1.5-3%. By mid-trading, the pan-European FTSEurofirst 300 index lost 1.29%, the British FTSE 100 - 0.78%, the French CAC 40 - 1.2%, the German DAX - 1%.
American stock markets opened mixed yesterday. Russian markets closed in negative territory, despite the growth of LUKOIL shares by 3.14%. The RTS index fell by 0.08%, to 1477.01 points, the MICEX index - by 0.19%, to 1431.21 points. “The Fed did not tell the market anything new, clarifying that it is monitoring the situation and, if necessary, will take measures to support the American economy,” notes Ekaterina Struchkova, an analyst at the information and analytical support department of B&N Bank. -- Probably, in the near future, players will try to find optimism in the words of the Fed, at least in terms of easing monetary policy. The Russian market will move mainly down this week, digesting the Fed's decision. Support can only come from macroeconomic data from the United States, which will be released this week and will give another idea of the situation with the American economy.”
The euro exchange rate jumped yesterday from 1.326 to 1.329 dollars amid increasing pressure on the American currency. During trading, the single currency reached 1.3312, the highest since August 6. On the Russian market, the euro strengthened by almost 58 kopecks, to 41.22 rubles. “The decline of the ruble against the euro was caused by a sharp increase in the euro against the dollar,” notes Denis Barabanov, head of the analytical department of the investment company Grandis Capital. -- The dollar weakened following the Fed meeting. The Central Bank assessed the state of the economy pessimistically and promised not to raise rates for a long time, which is negative for the dollar. Therefore, the current decline in the ruble is not due to internal reasons. I don’t expect any special actions from the Bank of Russia, this is a normal process.”