Federal Reserve commences two-day meeting
US central bank, the Federal Reserve, has commenced a two-day meeting today and it is expected to introduce a fresh round of stimulus.
There have been concerns for the US economic recovery amid low inflation and rising unemployment.
The US central bank looks as if it will adopt measures to safeguard the recovery after minutes of the 21 September meeting said the Federal Open Market Committee (FOMC) was “prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate.”
It will also announce its decision on interest rates but many analysts expect no change here. However, they do expect the Fed to commence with purchases of $500 billion of longer-term Treasuries over a six-month period.
This will leave allow flexibility to increase at a later stage, or not as the case may be.
The Fed will announce its decision at around 2.15pm (18.15 GMT) tomorrow.
This week has been described as “the busiest week in decades” as interest rate decisions are expected across the globe.
Today, Australia and India both opted to raise interest rates by 0.25% amid rising inflation.
The Bank of Japan, meanwhile, brought its next rate-setting meeting forward by 10 days and will now take place on 4-5 November – taking place shortly after the Federal Reserve’s meeting.
This will leave the BoJ to respond to any measures the US central bank decides to adopt as the Japanese yen continues to strengthen against the dollar.
Meanwhile, the Bank of England will announce its decision on interest rates on Thursday. There has been speculation that the Bank may increase its quantitative easing (QE) programme.
However, recent strong data from the British economy suggests that the Bank will hold off injecting more money into the economy by way of its QE programme for the short-term at least.