Forecast: Fed may increase discount rate more than planned

Baku. 22 February. REPORT.AZ/ On February 21, the US Federal Open Market Committee (FOMC) disclosed protocols on the results of Fed’s last monetary meeting.

Report informs citing the Bloomberg, there were some important ideas in the protocols.

It is noted in the protocols that a strong economic growth is observed in the United States and this can lead to a further increase in discount rate. The growth in the labor market, expenditures and investments has been fully restored and progressive development continues. Financial conditions and tax reform will help boost economic growth.

Some FOMC members have expressed concern about volatility in the global financial market. But in the short term, all members have stated that the positive trend in the US economy will continue.

FOMC members noted that inflation would reach 2% in 2018 and delay in monetary tightening could cause some problems.

Following the announcement of the protocols, the US stock exchanges declined. With the probability of an additional increase in rate US-dollar has started to appreciate and gold price declined.

Analytical Group of Report predicts that, USD/EUR rate expected to drop to 1.20, and the gold to $ 1 250/ounce, and the stock markets will decline by about 15%: “But since the second half of March, the financial market is expected to be restored as the Fed meeting approaches. This situation will be observed during all sessions of the Fed this year”.