Fed Chair Janet Yellen: "Monitor your credit report!"

Investors face risks as US Fed chair Janet Yellen tries to patch together a coherent narrative

"Hurricanes Harvey, Irma, and Maria have devastated many communities, inflicting severe hardship", according to the statement.

The central bank expected the Hurricanes Harvey, Irma and Maris to affect U.S. economy in the near term, but would not alter the course of the economy in the medium term.

The Fed gave few hints on the likelihood of a third rate increase this year, so analysts will have to watch for Fed Chair Janet Yellen's post-meeting press conference for further indications.

While the USA economy and especially its labor market has been relatively strong - unemployment has been below 5% since early 2016 - there has not been much indication that prices are starting to seriously accelerate, which traditionally prompts the Fed to pull back the reins and raise rates.

Gold "bulls are likely to be stressed as the market adjusts to incorporate Fed rate increases", commented Rob Haworth of US Bancorp Wealth Management. The Fed will start thinning out trillions from its balance sheet in October as it works to wind down its bond-buying program.

Ascribing to the speculations, the USA central bank stated that it will start the cutting on its massive holding of the US Treasury and mortgage-backed securities in October this year.

One more increase to range between 1.25 and 1.50 percent is likely before the end of the calendar year, which is about a quarter-point increase over the central bank's current benchmark. In fact FOMC's median projection for 2018 inflation is tweaked lower to 1.9 percent (vs. 2 percent) indicating that inflation would climb to a long-term rate but with a delay. That is about as frank as any Fed official has been throughout this period of low inflation, in which labor market improvements and steady economic growth has not translated into the sustained price gains that the Fed's economic orthodoxy would predict.

As per official predictions quoted in reports the unemployment level is expected to stay near the four per cent mark for at least the next three years. The resolution of the stand-off over the USA debt ceiling in Congress has removed the final obstacle to the decision, which the Fed said would proceed at a fixed monthly level that can be adjusted as needed to be either faster or slower.

"You could see mortgage rates going up as a result of them (reducing) their balance sheets", he said. In June it projected that core inflation would hit 1.7% this year and 2% next year. The federal Reserve wants the process to be very gradual and predictable to avoid causing turbulence in financial markets as had been the case in 2013 when it announced a reduction of its asset purchases.

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