Federal Reserve Allays Fears Of Market Due To US Elections By Maintaining Rates

By Richard Chiu | Nov 04, 2016 07:10 AM EDT

TEXT SIZE    

Financial experts believe that the Federal Reserve seems unfazed by the events that unfold in the week prior to the United States Elections as it downplays political factors affecting it.

This, after the Federal Reserve continues to maintain its federal fund rates at .25% to .5% percent during the latest meeting Wednesday, seeing that it may yet take effect in December of this year, as it sees no significant changes in economic volatility between now until the end of the election season. This is also due to findings of the recent Federal Open Market Committee meeting held last September where an overall positive trend in the economy was seen ranging from increased consumer spending, job gains, and economic activity, among others.

"There's no surprises here. This meeting was about setting the mood music ahead of the December meeting. All the signs now point to a hike in December," says Luke Bartholomew, fixed income investment manager at Aberdeen Asset Management. "However, there's the small matter of the U.S. election to navigate between now and the U.S. Federal Reserve's next meeting," he added in a statement Wednesday.

None of it, however, can be tied to factors related to the coming elections, as the Federal Reserve is sticking to its guns by letting market forces and quantifiable data that will impact the change in rates. In a Nov. 2 statement released by the Federal Reserve Board of Governors that in order to 'foster maximum employment and price stability' they see that these gradual adjustments in federal fund rates "will expand at moderate pace and labor market conditions will strengthen somewhat further."

It would seem like the Fed is helping quell any fear of uncertainty, but financial and economic analysts believe that the impact on the market may be felt during the outcome of the US elections and who gets to be elected as the next president.

pre post  |  next post
More Sections