3 feb
2020
11:25
Markets
The Federal Reserve did not change the rate: what does this mean for investors?

The US Federal Reserve System decided to keep the key interest rate at the same level. The decision was predictable but still had an impact on the markets. 

The Federal Reserve, acting as the country's central bank, revised the value of the key interest rate last week. It was decided to leave it unchanged at the level of 1.5–1.75% This was not a surprise—almost 98% of the Bloomberg analysts polled spoke for maintaining the rate. Prior to this, the interest rate was decreased three successive times, each time by 0.25%.

American stock exchanges responded to this decision with a slight decrease. But experts believe it is temporary, since the absence of changes cannot cause a drop in values. However, recently, the Fed has been more cautious in evaluating the US economy. It is noted that export and investment activity are weak, consumption growth rates are announced to be moderate, while in December, they were described as strong.
Jerome Powell, head of the Federal Reserve, also noted the instability of global markets and the danger of coronavirus, the consequence of which is the investors' desire to get rid of risky assets.

The US market did not respond with a strong decline to all these factors, because recently the Fed has actively bought back treasury bonds, providing a large inflow of money—up to $60 billion every month. This had a positive effect on the growth of stock market indicators. The program is planned to be completed in Q2 2020, which is likely to lead to a decrease in quotations.
The easing of monetary policy has provided support for the dollar. It has grown by 0.8%. Today, the USD/RUB currency pair is traded at ₽63.7648. After a short respite, the euro went up again, the exchange rate of the European currency against the ruble is ₽70.7329. In the nearest future, analysts do not expect a significant change in the situation.