Analysts believe the high probability of increasing the base rate to 1.25%

© AP Photo / J. Scott ApplewhiteГлавное the building of the Federal reserve. Archival photoAnalysts believe the high probability of increasing the base rate to 1.25%© AP Photo / J. Scott Applewhite

The likelihood that the Federal reserve (fed) will raise the base rate at the meeting of June 14, very high, we are talking about its increasing by 0.25 per cent to 1-1. 25%. Such confidence was expressed by experts interviewed by RIA Novosti on the eve of the meeting of the regulator.

The fed rate hike after a policy easing, which was designed to help the economy recover from the crisis, started in December 2015, when the fed at the meeting of the Federal open market Committee was limited to «signal» changes. This was the first increase since June 29, 2006. Another time the regulator raised the rate in a year by the same amount. In 2007-2008, the regulator gradually lowered the rate until, until it reached its lowest level of 0-0. 25% in December 2008.

«The Federal reserve’s meeting is likely to formally confirm the expectations of the market, which has long held the fourth rate hike of 25 basis points (to 1.25%) guaranteed. This confidence is not shaken even the latter is not very optimistic data from the USA», — stated in the analytical forecast Sberbank Investment Research.

The chief economist of Smith’s Research & Gradings Scott McDonald also expects a «mild rate increase of 0.25 basis points». Agree with him, and portfolio Manager Principal Investors Kyle Shostak.

The market will accept as normal

«Rate hike expectations by the market will be perceived absolutely normally, I don’t see any serious developments that might affect the fed’s decision,» said RIA Novosti Kyle Shostak. «The latest unemployment numbers were very good. Consumer activity is high,» he adds.

He notes that «emerging markets, especially large will be able to absorb the rate hike. For the most part they have a fairly high inventory and reserves. I own there is a process of growth and inflation. And, in General, the yield that these markets offer, able to cover the risks that arise in connection with the increased cost of borrowing,» says an expert.

Future is uncertain

Analysts are not sure how things will behave in the controller. «The fed is now occupied by the trim little softening of growth and market impact policy trump,» explains MacDonald.

Mikhail Krylov from «Golden Hills — Kapital AM» believes that in the case of continued tightening, the market may respond negatively. In his words, «the market reaction, we cannot exclude large-scale volatility of Bank stocks in response to any promises to sterilize investments in infrastructure increase in interest rates».

The results of the two-day fed meeting will be known on June 14 at 14.00 at Washington (21.00 GMT). Now the fed’s interest rate is 0.75-1%. In addition to the usual press release, the fed will present an updated quarterly economic forecast, and his head Janet Yellen will hold a press conference.