The United States Federal Reserve is not about to change the interest rates despite Euro Bonds falling on Thursday. But Fed officials said the financial institution is closely monitoring international financial and economic developments.
It seems that the bank had made itself ready for the current stock market selloff, but was not prepared to abandon its plan to squeeze monitory regulations this year.
This decision is somewhat expected by the financial community considering that the month-long dive in U.S. and global equities has raised alarms that a sudden international slump could adversely affect U.S. growth.
The yields of Euro zone bonds fell on Thursday, reflecting the moves earlier in U.S. treasuries when the U.S. Federal Reserve was suspected that it has taken a dovish stance when it acknowledged the volatility of the market.
German 10-year yields fell 2 basis points to 0.35 percent. This is the lowest points that the Euro zone benchmark suffered since April 2015. After the Fed released its statement on Wednesday, the U.S. treasury yields plunged 6 basis points from a day high of 2.05 percent.
Financial strategists believed that the prudent signal on the world's biggest economy together with the possibility of further relief from the European Central Bank showed that international monetary policymakers were prepared to respond to the current market unrest which was triggered by concerns about a slump in China and the plunging of oil prices.
But the reactions from other financial assets are inconsistent. Even as money markets reevaluate their expectations for the impending interest rate hikes, equities were selling off, implying that some of them had been valued for a more careful approach by the Federal Bank.
Policymakers at the Fed claimed that even with gradual rate increases, there will still be a stronger labor market in the U.S. and the economy will be kept on track for medium growth.
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