The Fed noted the recent slowdown in US growth – Le Figaro

As expected, the Federal Reserve has chosen not to change its key interest rate at the end of the two-day meeting of its monetary committee.

From our correspondent in Washington PDugua

The statement adopted unanimously by the Fed members while choosing not to change the policy rate considers discouraging signals given by the US economy since mid-December. The fall in prices of 19% oil, the apparent contraction of the manufacturing sector in November, the retail sales decline in December and the correction on Wall Street in a climate of high volatility, could not inspire caution Janet Yellen and colleagues. The impact of the slowdown in China and the recession in many emerging countries dependent on commodity prices are other factors that the Fed will consider.

It is in this context that must place the key phrase of the statement: “The Fed is closely monitoring economic and financial developments in the world and is in the process of determining their implications for the labor market and inflation …”. In further noting that “economic growth slowed at the end of last year,” the Fed seems to have given arguments to the pessimists who, on Wall Street, have flared up their clearances. Half an hour of the closing, the Dow Jones lost more than 1%, while the euro went back above 1.09.

A month ago, the organization has abandoned its zero interest rate policy by raising from 0.25% to 0.50% its main policy rate. The Fed judged plausible then four more rate increases in the same order in 2016. Its basic assumption was that growth would accelerate to 2, 1% in 2015 to 2, 4% in 2016. Today, these expectations seem more doubtful.

The first estimate of growth in the fourth quarter is expected Friday and that around 0.8% year on year, against 2% in the third quarter. The Fed noted, of course, the job market remains buoyant. The rise in consumer sentiment in January is reassuring. But also the objective of the Fed of accelerating price increases up to 2% seems more difficult to achieve, which calls for maintaining the current level of its key interest rate until 15-16 March date of the next meeting of the Monetary Committee. The Fed could have given a clearer signal that a rate hike was highly unlikely by mid-March. She preferred not to do it, obviously waiting to see what new conditions will give signals by then.