The Federal Reserve System (FRS) of the USA will keep the base rate in the range of 0-0.25% at the reference meeting on September 21-22, follows from the consensus forecast of Izvestia. At the same time, analysts expect that the Fed will lower its estimates for the growth of the American economy, as well as signal a reduction in monetary stimulus and the curtailment of the asset repurchase program (QE).
The curtailment of the QE program may temporarily reduce the demand for risky assets, says Varvara Ponomareva, Deputy Director of the Directorate for Operations in the Financial Markets of Bank Saint Petersburg, fears. This will negatively affect the ruble, she explained: the USD / RUB rate, if the Fed’s rhetoric is unexpectedly tough, could exceed the RUB 74 / $ mark.
“Nevertheless, the negative for the ruble will limit the tax period – on Thursday and Friday, exporting companies are likely to increase sales of foreign currency earnings to pay the mineral extraction tax (MET), which will support the ruble. In general, taking into account that the FRS may adhere to soft rhetoric at the meeting, we expect that the USD / RUB rate this week will be in the range of 72.5-74.1 rubles / $, ”predicted Varvara Ponomareva.
The tightening of the Fed’s rhetoric carries risks of higher borrowing costs for developing countries, noted PSB chief analyst Yegor Zhilnikov: this will put pressure on the prices of ruble and Eurobonds of Russian issuers.
For more details, see the exclusive material of Izvestia:
“Zero, and only: the Fed is expected to keep the rate in the range of 0-0.25%”