By Craig Torres The Federal Reserve left interest rates unchanged and signaled it would keep them on hold through 2020 amid a solid economy, sticking to the sidelines during an election year. “The committee judges that the current stance of monetary policy is appropriate to support sustained expansion of economic activity, strong labor market conditions, and inflation near the committee’s symmetric 2% objective,’’ the Federal Open Market Committee said in a statement Wednesday following a two-day meeting. The Treasury 10-year yields fell below 1.8%, the dollar declined and U.S. stocks edged higher as investors digested the news and comments during a post-meeting press conference by Chairman Jerome Powell. These included his observation that the committee might consider widening reserves management-related Treasuries purchases to include coupon-bearing securities, if necessary, to ease liquidity strains in money markets. The Fed, in its first unanimous vote … [Read more...] about US Federal Reserve keeps rates steady, signals no change in 2020
High rates of inflation
Dollar edges lower after Fed holds rates steady
NEW YORK: The US dollar edged lower against a basket of major currencies on Wednesday after the U.S. Federal Reserve held interest rates steady and signaled borrowing costs are likely to remain unchanged indefinitely. The Fed expects moderate economic growth and low unemployment to continue through next year's presidential election, the U.S. central bank's rate-setting committee said in its policy statement after the end of a two-day meeting on Wednesday. The decision left the benchmark overnight lending rate in its current target range between 1.50% and 1.75%. "The bar to a rate hike remains higher than the bar to lowering rates further, but overall you are looking at a Fed that is fairly confident about where the economy is headed and expects inflation to remain under pressure for a prolonged period of time," said Karl Schamotta, chief market strategist at Cambridge Global Payments in Toronto. The dollar index, which measures the greenback against six other major currencies, was … [Read more...] about Dollar edges lower after Fed holds rates steady
10-year yield surges 5 bps to close at 12-week high
Yields on government’s 10-year treasury bill surged yet again on Wednesday to close at a 12-week high, as traders, partly spooked by global rating agency S&P’s warning over a possible downgrade of India’s sovereign rating, continued their selling spree. "If this (GDP) recovery does not materialise, and it becomes clear that India’s structural growth has significantly deteriorated, we could lower the rating,” S&P Global Ratings credit analyst Andrew Wood said on Wednesday. The rating agency also forecast the real GDP growth to further decelerate to 5.1%. The yields gained five basis points on Wednesday to close at 6.76 basis points. The benchmark yield has now surged 27 basis points in five trading sessions since the Monetary Policy Committee (MPC) unanimously decided to keep repo rates on hold Thursday; a decision which largely belied market’s expectations given the sluggish economic performance in recent times. One basis point is 0.01 … [Read more...] about 10-year yield surges 5 bps to close at 12-week high
We expect another Fed rate cut in first half of 2020: Jahangir Aziz, JPMorgan
In India, the high frequency indicators turning around would face headwinds given that all of a sudden, we now have financial conditions tightening here, rather than easing which is what is happening in the rest of the emerging market or world, says Jahangir Aziz, Head, Emerging Market Economics, JPMorgan. Excerpts from an interview with ETNOW. The US Fed has kept interest rates unchanged this time around and more importantly, signalled no rate hikes in 2020, sticking to the sidelines during an election year. What is your view?The pause was well telescoped. Our view is that probably given the push to change the framework of interest rate targeting in the US, which has been going on for some time, the Fed will most likely keep rates lower than what they normally would do and therefore we expect another cut in 2020 in the first half. The US President is insisting that Fed should cut rates. On the other hand, he is also claiming that the US economy is doing rather well. If Fed cuts … [Read more...] about We expect another Fed rate cut in first half of 2020: Jahangir Aziz, JPMorgan
Rupee opens 16 paise higher at 70.68 against dollar
The rupee on Thursday opened 16 paise higher at 70.68 against the US dollar after the US Federal Reserve held interest rates steady in its final policy meeting of the year and signalled no changes in 2020 amid solid economy and persistently low inflation. The local currency appreciated by 7 paise to settle at a fresh one-month high of 70.85 against the US dollar on Wednesday on the back of firm domestic equities and easing crude oil prices. The Fed’s move can provide a double booster for domestic financial markets as US stocks added to the gains, while the dollar slipped to a four-month low after the policy decision. The central bank’s rate-setting committee was unanimous for the first time since May in keeping the benchmark overnight lending rate between 1.50 per cent and 1.75 per cent. Fed chairman Jerome Powell in a post-policy media interaction said the three interest rate cuts affected during 2019 have supported the economy. On the domestic front, inflation and … [Read more...] about Rupee opens 16 paise higher at 70.68 against dollar
