Baku. 15 April. REPORT.AZ/ US Federal Reserve will raise interest rates twice in 2016, and the first increase is likely to occur in June, but chances reduced amid signs of a weak start to the year, lack of inflation and global instability. Report informs referring to Investing.com, the Fed is not likely to take any action at the April meeting, but will raise the federal funds rate by 25 basis points in June to 0,50-0,75%. Another increase is expected to happen before the end of the year, whereby the rate to make 0.75-1.0%.
However, economists confidence in two rises this year weakens.
A growing minority of economists polled by Reuters in the framework of the monthly research is about 25% - predict just one increase this year compared to 15% in the March poll.Two-thirds of economists - 54 of 81 - expect increase by the end of June, respondents forecast on average a 55% probability that compared with 60% in March.
A bright spot for the regulator - the US labor market. For the past year, with the exception of three months, it was produced 200 thousand and more jobs in the economy, including 215 thousand in March.The number of applications for unemployment benefits fell last week, coinciding with the level of the beginning of March - the lowest since 1973.
While there is no significant rise in the level of wages and consumer price inflation.In March, inflation fell to 0.9% year on year from 1.0% in February.
Amid concerns about the global economy, especially the situation in China, respondents on average expect a 15% probability of a recession in the US, as well as in March.Data released today showed China's economic growth in the first quarter by 6.7%.This is 7% below the target level of the Chinese government.
The US economy almost stopped growth in January-March, according to the latest forecasts of the Federal Reserve Bank of Atlanta.Economists polled by Reuters were more optimistic, expecting 1.2% growth of economy in the first quarter on an annualized basis.However, it is much lower than the growth forecast of 2.0% just a few months ago - an unusually sharp decline in such a short period of time.Economists continue to worsen their growth forecasts for 2016.
Now they expect the US economy to expand by 2.0% compared with 2.1%, according to a poll in March.
The International Monetary Fund (IMF) this week again reduced its growth forecast for the US economy and now expects to expand by 2.4% in 2016, compared with 2.6% in the previous forecast.
Analytical Group of Report News Agency believes that the impact of the current economic expectations on financial market will be different. So, wavy changes of the US dollar will be observed until the end of the year in relation to other currencies. There is a probability of USD / EUR rate movements in the range of 1.05-1.15. Oil prices under the influence of falling demand amid the global economic slowdown will continue to fall. Fluctuations is predicted in crude oil prices in the range of 25-50 USD / barrel. Significant changes in gold prices will not happen. Although the demand for the precious metal is reduced, due to global economic risks, the gold price will remain at1,200 USD / ounce.
Along with this, dollar will not fall below 1,50 AZN/USD in Azerbaijan. Against the backdrop of falling oil prices after their short-term increase to 50 USD/barrel, the rate will temporarily drop to 1,45 AZN/USD.
But then again the dollar can rise to 1.80 AZN.