The U.S. Federal Reserve board has decided not to increase interest rates because of developments that could stall global growth. But Chairman Janet Yellen left the door open to raising rates again before the end of the year.
CCTV America’s Jessica Stone reports.
Federal Reserve leaves interest rates unchangedThe U.S. Federal Reserve board has decided not to increase interest rates because of developments that could stall global growth. But Chairman Janet Yellen left the door open to raising rates again before the end of the year.
“Proceeding cautiously in raising our interest rate target, will allow us to verify that economic growth returns to moderate pace, that labor market will strengthen further,” Yellen said.
Two weeks ago, analysts saw signs of softening in the labor market – May brought the fewest number of new jobs in more than five years.
What’s worse, oil prices have been falling since the beginning of 2016, which hurts the U.S. energy sector.
Some economists also said that Donald Trump’s election rhetoric could spark a trade war with China.
And then, there’s the looming Brexit, Britain’s possible exit from the EU after next week’s referendum. It’s a risk already roiling global stock markets. According to Yellen, that weighed on the minds of central bank governors.
How much do rate rises matter
Tiny changes to the U.S. interest rate are seized upon by economists and stock markets all over the world. But how much do they matter to the mainstay of the U.S. economy, small businesses.
CCTV-America’s Owen Fairclough reports.
How much do rate rises matterTiny changes to the U.S. interest rate are seized upon by economists and stock markets all over the world. But how much do they matter to the mainstay of the U.S. economy, small businesses.
It’s been six months since U.S. Federal Reserve raised interest rates fraction from near zero. In that time, central bankers here watched and worried over nudging up them again.They have to consider how that impacts people from Chile to China.
But how much do these fractional changes really matter on the ground.
One man who built on those flattened interest rates seen is Erik Kugler. He co-founded BicycleSpace in 2010 as business large and small crashed and the U.S. slashed those rates to save the economy.
“It was a huge gamble because no one really knew what to expect,” Kugler said.
Even so, it was a gamble that allowed Kugler to capitalize on cheap leases in regeneration zones and expand to three stores, just because the interest rates began to rise again with the economic recovery.
He ignores central bank moves. His timing is focused on cycling rather than economic cycles.
U.S. consumers are now spending big again. But for some analysts, they think consumers are ignoring these marginal interest rate rises to take on too much debt.
“That would slow down the pace of building we have seen here in D.C. and would mean not getting in as many residents as fast as we have, and that would hurt,” said Kugler. “But on the other hand, if it meant a stronger dollar, it would mean we would be able bring in goods cheaper and be able to offer a better service to our customers.”
Brian Weinstein on Federal action
For more on the Federal Reserve leaving interest rates unchanged and federal actions, CCTV America’s Michelle Makori spoke to Brian Weinstein, chief investment officer for Blue Elephant Capital Management.