US Federal Reserve signaled for monetary policy tightening

The US Federal Reserve signaled that another round of monetary policy tightening might be imposed in September, despite of expected no intervention of the interest rates on today’s meeting. Shortly before the publication of the opinion of the Federal Open Market Committee, which sets monetary policy, the indices on Wall Street turned the trend and penetrated the red territory. Following the publication, Dow Jones and Nasdaq returned to green spectrum, albeit slow growth rates, while S&P finished with minimal decrease. The yields on 10-year US government bonds fell by 2.6 basis points to 1.535%, which is the lowest level of on July 13. The yields on 30-year bonds fell by 4.6 basis points to 2.233%. Moreover, the USD rose against its main competitors in the currency markets.

Federal Open Market Committee indicates that the data show stability in the labor market and moderate expansion in economic activity. Although household spending grew rapidly, however, business investment remains far from the pace of growth of private consumption. Inflation also remains below the target level of 2%, partly reflecting the decline in energy prices and import prices of non-energy goods.

Federal Open Market Committee expects that a gradual adjustment in the stance of monetary policy, economic activity will expand at a moderate pace and performance of the labor market will strengthen.

Fed stresses that inflation will remain low in the short term, but that will be increased to the target level in the medium term because of the transitional effects of the decline in energy prices. According to the Federal Reserve long-term risks to the economic outlook of the US have declined.

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