What Did FOMC Decide?

FOMC announced to keep the interest rate at 0.25% and not much information about the QE3. The program is maintained at the previous parameters with no given data for an eventual tapering. On the other side, the inflation becomes an alarming issue as “persistently below its 2% objective could pose risks to economic performance”. In this regard, and taking in consideration the continuation of the monetary stimulus program, economists are expecting the core inflation to rich 2% in the medium term.

Earlier today, good news came for the American economy, as signs of recovery appear to become increasingly more consistent. The ADP report came up better than expected (200k), possibly giving the tone to the NFP that is waited on Friday. Broadly, this result is sustained by the services sector which created 177k jobs, the biggest gain since last November. The labour market demonstrated the fact that the turbulences given by the cuts in government spendings, fiscal issues and tax increases were safely overcome. The advanced GDP release (1.7%), the version that tends to have the most of the impact, showed that the worse of the financial problems are being left behind.

 

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