The US FED Monetary Policy Report has set a new mood in the financial markets. Yesterday the DOW JONES returned to the 16000 points and today people are crushing the numbers. According to the FED reserve projection 2016 could be the year in which the economic will be at acceptable levels with low unemployment, inflation at 2% or near it and stable GDP.
What to expect them? Definitively a stronger US Dollar, higher interest rates, and perhaps acceleration in the tapering monetary program by 2015. The DOW JONES could reach new high and companies valuations over the roof and overbought. It will be time to take profits out, so the next two year seem to be a good time to invest. Of course it is all a projection after all.
US FED Monetary Policy Report Highlights:
- The labor market improved further during the second half of 2013 and into early 2014 as the economic recovery strengthened: Employment has increased at an average monthly pace of about 175,000 since June, and the unemployment rate fell from 7.5 percent in June to 6.6 percent in January.
- The unemployment rate remains well above levels that FOMC participants judge to be sustainable in the longer run.
- Consumer price inflation remained low. The price index for personal consumption expenditures rose at an annual rate of only 1 percent in the second half of last year, noticeably below the FOMC’s longer-run objective of 2 percent.
- Economic growth picked up in the second half of last year. Real gross domestic product is estimated to have increased at an annual rate of 3-3/4 percent, up from a 1-3/4 percent gain in the first half.