Results of the week: Kuroda was not impressed markets and Yellen continues reassuring
Global financial markets continue to comprehend decisions on monetary policy the US Federal Reserve and Bank of Japan.
The Fed left the federal funds rate unchanged after a meeting of the Federal Open Market Committee on Wednesday, but made it clear that the increase in borrowing costs may occur in December, when labor market conditions continue to improve.
At the same time, the US central bank has reduced the number of expected rate increases this year from two to one and predict a less aggressive interest rate rise in the next two years.
The next meeting of the Fed’s monetary policy is scheduled for the beginning of November and mid-December. Economists believe that the rate hike is unlikely in November largely because the meeting will take place just a few days before the US presidential election.
Markets are currently estimated at 15% probability of a rate hike at the November meeting, according to the forecast of the Fed rate by Investing.com. The chances of its increase is about 60% in December.
The Fed’s decision came shortly after the Bank of Japan kept interest rates unchanged at 0.1% and announced that it will be more flexibility to manage the rate of growth of the money supply, as quickly as possible to achieve the acceleration of inflation to the 2% target.
Japanese regulator moves from target to expand the monetary base targeting the yield of government bonds (JGB). The Central Bank intends to change the amounts of JGB purchases to increase the slope of the curve and keep the yield on 10-year bonds around zero.
However, investors skeptical about the ability of the Bank of Japan to achieve an inflation objective with the new measures. Some experts believe that the Japanese regulator end effects tools.
In contrast, the Federal Reserve continues to justify the market expectations regarding the timing of the next increase in US interest rates.
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