‪‎ChoiceBroking‬ ‪‎FOMC‬ ‪‎UPDATE‬

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The US Federal Reserve hiked its interest rates for the first time in a decade by 25 basis point (bps) to 0.5 percent from
0.25 percent. US Federal Reserve Chair Janet Yellen stated that further rate hikes will be at a gradual pace. The central
bank painted a confident picture of US economy and expected that the economy will pick up despite global slowdown
along with room for improvement in employment scenario. FOMC stated that wage growth is yet to show a sustained
pickup,netexportshavebeenrestrainedbydollarandforeigngrowth.
Finally, Fed in Action17th December 2015
The US Federal Reserve Chair Janet Yellen stated that level of new home buildings still remains low, adding that much
shortfall in inflation is due to energy prices falling down and appreciation in the dollar. However, long term inflation
expectations overall look stable. Furthermore, Fed stated that diminishing labor markets should help boost inflation
and delaying liftoff for too long will risk abrupt tightening. FOMC focused on economic growth and asserts if growth in
the US economy remains subdued, interest rates will probably rise at slow pace. According to median estimates,
interest rates would be at 1.38 percent by 2016, at 2.38 percent by 2017, at 3.25 percent by 2018 and to stay at 3.5
percentinlongterm.
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Outlook: Going forward, it is estimated that the Federal Reserve will hike rates at a gradual pace. Though, stronger
economic growth or faster inflation would make steeper hikes appropriate. The central bank decided to move
because conditions like favorable unemployment rate and slow growth in GDP prompted the Fed to take action.
FOMCalsopinpointedthatthoughglobal economyriskpersistsbut USeconomyisstrong.Innearterm,investorswill
havetoadopta waitandwatchstanceandobserveminutelyonhowtheFederalReserveactsinthecomingyear.
Finally, Fed in Action
Dec 17, 2015
9.8
9.4
9.8
9
8.3
7.7
6.6
5.7
5
4.5
5.5
6.5
7.5
8.5
9.5
US Unemployment Rate
0.2
3.1
(2.7)
2.0
(8.2)
3.9
1.7
3.9
(1.5)
2.9
4.6
0.1
3.8
(0.9)
4.6
0.6
3.9
2.1
(9.0)
(7.0)
(5.0)
(3.0)
(1.0)
1.0
3.0
5.0
US GDP QoQ
0.1
(0.1)
0.4
0.5
0.0
(0.2)
0.6
(0.2)
0.6
0.3 0.3 0.3
(0.1)
(0.7)
0.2
0.4
(0.2)
0.2
0.0
(0.8)
(0.6)
(0.4)
(0.2)
0.0
0.2
0.4
0.6
US CPI
50
55
60
65
70
75
80
85
90
95
100
US Consumer Sentiments

2. SEBI Certified – Research Analyst www.choiceindia.com
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Research Team
Mr. Sumeet Bagadia Associate Director
Anish Vyas Sr.Research Associate
Kunal Parmar Research Associate
Amit Pathania Research Associate
Kapil Shah Research Associate
Rajnath Yadav Research Analyst
Satish Kumar Research Analyst
Vikas Chaudhri Research Associate
Trirashmi Ghoderao Research Advisor
17th December 2015
At Last, Fed in Action
Kunal Parmar
Digitally signed by Kunal Parmar
DN: cn=Kunal Parmar, o=Choice Equity Broking
Pvt Ltd., ou=Research Dept,
email=kunal.parmar@choiceindia.com, c=IN
Date: 2015.12.17 12:00:08 +05'30'