Last week, the whole financial world was in suspense awaiting the outcome of the two-day policy meeting of the US Federal Reserve. Indeed, the decision on the interest rates hike is capable of reshaping crucially the global economic landscape, though policymakers from various countries make loud statements that the power of the American economy is a fake and the US dollar is an overvalued currency. Meanwhile, emerging markets can breathe a sigh of relief: the Fed’s policy-setting committee has kept interest rates unchanged at the previous level of 0-0.25%. The decision rests on the recent economic growth data, the inflation rate, and the labor market condition. These are weighty arguments against tightening the monetary policy. The US GDP growth in Q3 proves tepid economic expansion. Consumer prices are still rising at a slow pace. US jobs growth has slowed and the unemployment rate has been steady. Jeffrey Lacker, Richmond Federal Reserve Bank President, is the only voting member of the FOMC, who insists on the hawkish stance. The top official is certain that the central bank should adopt urgently a tighter monetary policy. However, the rest of the FOMC share the dovish stance. From their viewpoint, the interest rates hike should be announced only on condition that the labor market signals steady positive improvement and consumer inflation approaches the target level of 2%. “My previous recommendation on the EUR/USD pair was to take profit at 1.1190. Those investors, who followed my advice, should again consider purchases setting more ambitious target levels,” independent analyst Herman Listyev made a comment.
