US Federal Reserve's Open Market Committee (FOMC) kept interest rates unchanged, while at the past committee's meeting in mid-June the target rate was raised to 1-1.25% from 0.75-1.0%.
The Fed also raised the rate in March, keeping it unchanged at the meeting in June.
"Inflation on a 12-month basis is expected to remain somewhat below 2% in the near term but to stabilize around the Committee's 2% objective over the medium term. The Committee will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run," the statement says.
Professor of the RANEPA faculty of Finance, Money Circulation and Credit, Yuri Yudenkov, speaking to Vestnik Kavkaza, said that the US Fed will raise the rate again by the end of the year. "They have no choice. But the problem is that when they raise the rate, their external debt payments [US treasuries - VK] increase. Payments are increasing as the rate changes. That is, the amount of payments depends on the interest set by the Fed, which is connected with the debt. In addition, if they raise the rate now, then the volume of payments on securities will start declining. That is, the choice is between US treasuries and company shares. So the US Fed will raise the rate by the end of the year again. At the same time, it is unlikely to be 2.5%, as it was supposed earlier, because it is the end of July, and the rate is at the level of 1.25%," the expert said.
At the same time, he noted that the decision of the US Fed to leave the rate at the previous level will not affect the course of the Russian national currency. "The decision of the US Congress and the adoption of a law on counteracting Russia's influence on Europe and Asia will most affect the ruble. The adoption of this law puts us in a very difficult situation, as Russia is cut off from the world's money. This law will affect the ruble in the first place, on oil prices in the second place, and only then the Fed rate," the economist explained.
In addition, he pointed out that raising the rate lowers the competitiveness of the dollar against the euro. "So it was a complete surprise to me that the US did not raise the rate yesterday. I do not have any explanation why the Fed did not increase the rate, but I think it's temporary," Yury Yudenkov concluded.
