Janet Yellen - Chair of the Board of Governors of the Federal Reserve System Janet Yellen - Chair of the Board of Governors of the Federal Reserve System

Brexit makes FED cautious about possibility of raising rate

In the policy meeting in May 6th, 2016, the US Federal Reserve System (Fed) announced all decisions of raising interest rates of US dollar will be delayed until Fed gauges the consequences of leaving European Union (EU) of England. It is the content of the minutes of the Fed's most recent meeting was posted on Wednesday, Reuters quoted.

Specifically, according to the minutes of the Fed meeting results on 14th and 15th of June (before Brexit), Fed officials expressed very worrying psychology about the consequences of Brexit.

"The members of Fed agreed that before thinking of the dollar interest rate adjustments or change of oriented monetary policy, we need more data on the impact of Bexit on economy", Fed officials stressed.

From time of the meeting took place, fears of Fed officials grow over time. On Wednesday, a senior Fed official, Daniel Tarullo, confirmed just not thinking of raising interest rates until inflation in the US reaches a target.

Brexit has made the global financial markets "stunned", in just 1 day after the historic vote in the UK, global stock markets lost $2 trillion.

Until now, the post-Brexit worries are continuing due to that investors expected it takes many years for Britain and EU to be able to reach a consensus on the regulation of the financial sector, trade and immigration.

On Wednesday, government bond yields fell to US record low, many investors believe that at least until 2017, the Fed could raise the base rate of dollar.

"We will take several consecutive months to have positive signs of US economy when it is possible to adjusting new base rate of dollar", chief investment officer at Wells Fargo Funds Fund Management, said Brian Jacobsen, said.

Since Brexit, US dollar has constantly increased, by reaching more than 2% increase compared to the other currencies in basket of major currencies of the world. Dollar rose, this adversely affects US export. After the minutes of the May meeting of the Federal Reserve was published in June 2016, US dollar fell slightly.

Before Brexit, Fed said possibility ofraising interest rates two times in 2016 to prevent US economy from overheating. Since Brexit, many Fed officials repeatedly have warned extreme caution with this decision and it is too early to assess the full impact of Brexit.

Although the US non-manufacturing sector signaled positive but business investment and recruitment activities of the business do not grow respectively.

After Brexit, British pound has depreciated 13% against USD, particularly on Wednesday, the British pound fell by 1%.

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