Date: 3 days ago   Category: Economy

As the rate of U.S. Fed influences economy of Ukraine

Recently the wide resonance was received by "verbal interventions" of the U.S. President Donald Trump to the Federal Reserve System.

"My problem is FRS. FRS dispersed, raises rates and it is senseless", - the American president said recently.

this year the Federal Reserve System raised a key interest rate three times, without hiding that it does it for the purpose of prevention of overheating of the economy. But Trump interprets it so that the Federal Reserve System contains GDP growth. "Every time when we do something big, it raises the stakes", - Trump said, having added that to the head of the Federal Reserve Jerome Powell, "probably, just it is pleasant to raise the stakes". I will remind, in the second quarter gain of GDP of the USA in annual measurement was 4.2% (at most since 2014), in the third quarter - 3.5%.

as a result, on November 28 Powell said that the present level of rates (they are in range of 2-2.25%) is close to neutral. "Neutral" level is that which at the same time does not constrain, but also excessively does not disperse economy.

But FRS not only raises rates, leading to growth of dollar exchange rate owing to increase in appeal of the tools nominated in it, but also reduces the balance. Since October, 2017 until the end of September of this year the balance of FRS was reduced by 270 bln. dollars. Increase in a rate and reduction of balance of the Federal Reserve System has a task monetary policy "normalization", that is creation of a situation at which the financial markets and economy of the USA can independently move, without artificial support from FRS in the form of the QE programs. Gradually leaving the market, FRS levels also reasons for charges of what it "inflates" a bubble in the market of assets.

Time for toughening of monetary policy in the USA is chosen successfully. Strong dynamics of GDP, growth of volumes of industrial production, increase in internal sales increased ability of the American companies to generate a cash flow independently, without "injection of liquidity" from FRS. In fact the Federal Reserve System is forced to raise rates in response to fiscal incentives within tax reform which pushed the budget deficit of the USA to the level of 5% of GDP. There is it at peak of a business cycle when similar fiscal incentives can do much harm - the economy of the USA is close to "overheating", it approaches restriction of production capacities, unemployment is on a semicentennial minimum (3.9%).

Passes to strengthening of policy and the ECB - an exit from the program of quantitative easing started in January, 2015 is planned for the end of this year. How all this to affect developing countries which also Ukraine treats?

the First problem. By estimates of Bank for International Settlements, the country with emerging markets for the last 10 years twice increased the debt nominated in dollars, having brought it to the sum of 7.2 trillion dollars. Therefore developing countries receive double blow - from the becoming stronger dollar and from the best rates. Our country in a difficult situation - for example, next year Ukraine has to pay about 5.9 billion.



2 days ago

One of the most famous and highly paid Hollywood actors Eddie Murphy became a father for the tenth time. As informs with reference to the western tabloids, at the actor the son was born....

2 days ago

Late at night on December 7 in Kryvyi Rih on residential district Zarechny-5 the driver of BMW on the Lithuanian numbers apparently did not manage to drive and crashed into a concrete fence of parking...

2 days ago

The secret novel was for the woman an occasion of revenge to the traitor which can be turned into reality now. On Channel One was outlined intense scandal on the shouting subject again. The matter i...

2 days ago

Today, on December 8, approximately at 20:00 on Lyustdorfskaya Road the girl driver of BMW on "eurometal plates" did not manage to drive and crashed into a fence of prison. As reports ""...

2 days ago

Unpleasant incident occurred on December 6 in the city Raisin of the Kharkiv region. As reported in local police station, about five o'clock in the evening to the 80-year-old woman the friendly woman...

2 days ago

In Hamburg the congress of the German conservatives who elected Annegret Crump-Karrenbaueer Angela Merkel successor on a post of the chairman of CDU came to the end. On Saturday, December 8, in Hamb...

2 days ago

The American company Ford on social network "VKontakte" organized and conducted survey which purpose was identification of the most useful automobile options in winter time for the Russian roads. th...

2 days ago

For most of the people suffering from this or that form of diabetes need to constantly take a blood test from a finger is not the most pleasant procedure - for this reason many teams of developers act...