Today the Federal reserve will announce a two-day meeting. What can you expect and what will investors look?
First of all, it should be noted that growth rates at this stage, practically no one is waiting. More importantly, what signals the regulator will give the market for the future.
As always, market participants ahead of the meeting of the Federal reserve carefully watching the fresh macroeconomic statistics.
In the US there is a noticeable drop in real estate sales. In March – by 1.5%, although the expected growth. As for house prices, the index Case-Shiller for five consecutive months is not justified forecasts of analysts.
Did not meet expectations and data on industrial production: minus 0.6% in March, against expectations of 0.1%.
Ambiguous is the situation with inflation is one of the key parameters for the fed.
If the underlying, i.e. excluding prices for food and energy in March has almost reached the desired 2% then the overall index decreased by 0.2%. Incidentally, this is the worst performance since 2009.
Negative dynamics is observed in the indexes of business activity in key regions of the country. So, after Philadelphia and Dallas, in the Richmond index in April showed the highest fall since August last year.
In March, we recall, were observed extraordinarily strong growth, which, however, few people understand.
Most analysts in this situation, waiting for the signal for the future: the Fed will have another meeting in June and November. However, some experts believe that the comments of the fed can influence the election campaign.
Bluford Putnam, managing Director and chief economist of CME Group
“The fed says he is out of politics, but it’s not. In November – a very difficult election. So the fed would want to distance themselves from them: to raise the rate in June or make a decision after in December. But almost certainly they will not do anything neither in September nor in October. So the real driving force now is not the economy, and politics”.
It is possible that the market will take a little break and wait for fresh data on GDP growth, they will be released tomorrow. Then the statistics can be measured, and to make more or less informed bets.
By the way, according to the forecast of the Atlanta fed, where GDP estimate that makes automated model, the growth rate of GDP in the first quarter will be modest 0.4%.
Anyway, the meeting of the regulator, likely to have in the medium term a significant impact on the market.
