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admin escribió:Things to Watch at the Fed Meeting
Federal Reserve officials are virtually certain to hold interest rates steady when their meeting ends Wednesday but they could try to send a message to markets and outside observers about what likely comes next. With no press conference scheduled after this week’s meeting and no new economic forecasts to be released, all the attention will be focused on the Fed’s policy statement, to be released Wednesday at 2 p.m. EDT. Here are five things to watch.
26 APR 2016 6:00AMBY DAVID HARRISON CONNECT
1 Balance of Risks
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Fed officials routinely include a line in their statement assessing the risks to their economic outlook. Risk, in this context, means the likelihood that the economy does not behave according to their projections. Sometimes there are more risks that the economy underperforms, which Fed officials call “downside risks.” Sometimes, the risks are tilted towards an overperforming economy, known as “upside risks.” Sometimes, they are in balance. The assessment offers a clue about officials’ confidence in the economy. For the past two meetings, officials have conspicuously not included a risk assessment because of an internal split. The statement will show whether they have reconciled their views.
2 Hints of June
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Observers will be parsing Wednesday’s statement closely to see whether Fed officials drop any hints about a potential rate increase at their next meeting in June. Some economists say this week’s statement could resemble the October 2015 statement, in which the Fed held rates steady but explicitly mentioned the possibility of moving “at its next meeting.” Although a hint of a coming rate increase will probably not be as explicit this week, officials could find a way to include a subtle nod towards future action.
3 The Global Outlook
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Fed officials have made no secret that the global economic and financial upheavals of the past few months could threaten the U.S. economy. Those worries spiked in January when a wobble in the Chinese economy and a renewed drop in the price of oil drove investors into safer assets and threatened to derail the slow global recovery. The world looks calmer today but Fed officials remain apprehensive. “Global economic and financial developments continue to pose risks,” their March statement read. How Fed officials describe those conditions this week could tell us how worried they are about another round of turbulence.
4 Inflation Wariness
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Inflation has undershot the Fed’s 2% target for more than three years but officials got some promising signals in January when the personal-consumption expenditures price index rose 1.2% over the previous year, suggesting an easing of downward pressure from low energy prices and a stronger dollar. February’s inflation numbers were softer, with prices up 1% over the previous year, but analysts see a glimmer of hope in the data. Fed Chairwoman Janet Yellen, however, said at her March 16 press conference she was “wary” of relying too much on first quarter data, which could be distorted by seasonal trends. The statement Wednesday could tell us how significant Fed officials believe the recent inflation numbers are.
5 Watch for Dissents
So far this year, officials have generally found consensus about holding interest rates steady, recording just one dissent at their two policy meetings. The nay vote was from Kansas City Fed President Esther George in March, when she wanted to raise rates. She could dissent again this week, having warned earlier this month that waiting to move could fuel dangerous asset bubbles. She might be joined by Cleveland Fed President Loretta Mester or James Bullard of St. Louis, who have both recently suggested they would like to resume raising interest rates.
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