Baku, Azerbaijan, Jan. 31
By Anvar Mammadov – Trend:
The Federal Open Market Committee of the US Federal Reserve System will announce the results of its two-day meeting today.
This is the first meeting of the committee in 2018 and market participants focus on the Fed’s decision on interest rates.
Fed chair Janet Yellen is not expected to deliver traditional speech at today’s meeting. This is the final meeting for Yellen. Jerome Powell will head Fed from February. Therefore, one should not expect an increase in key rate today.
Fed's possible statement about a threefold increase in interest rate during 2018 is much more interesting. Most likely, we will see the first rate increase following the March Fed meeting, while the next may occur during the September and December meetings.
If this statement is made, then one can expect a relative correction of the dollar rate, which in the past few weeks is in weak positions against the leading world currencies. In particular, the euro / dollar pair may fall to 1.22-1.23 USD / EUR.
On the other hand, Fed may announce a slowdown in the pace of tightening monetary policy under the new management. In this case, one can talk about further strengthening of the euro rate. Europe’s single currency may strengthen to 1.25 USD / EUR and more.
Given the fact that Fed is unlikely to raise the rate, experts estimate the probability of this step at three percent. In the near future, the pressure on the Azerbaijani manat by the US dollar will more weaken.
On the other hand, a weak dollar may open new prospects for the oil market, which before the meeting shows a slight decline. Further decline in the US dollar rate may contribute to a new rise in oil prices, which will have a positive impact on Azerbaijan’s economic indices.
Trend analyst Anvar Mammadov