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The Week in Numbers: Fed Keeps Rates Steady

As expected, the US Federal Reserve kept rates steady at its Federal Open Market Committee (FOMC) meeting this week. Rates have not changed thus far in 2019, with the target federal funds rate range of 2.25% and 2.50%. The dot plot, which shows where the committee’s voting members see rates going, is projecting no interest rate movements in 2019, one cut in 2020 and an interest rate hike back up to current levels in 2021. Of the 17 members who gave their projections, eight expect no rate cuts in 2019, while seven expect two rate cuts coming later this year.

The Fed’s forecast for the United States’ 2019 GDP growth remained unchanged at 2.1%, while 2020’s projection was cut to 1.9% from 2.0%. Year-end unemployment is expected at 3.6%, a slight improvement from the 3.7% previously projected.

Meanwhile, China’s President Xi Jinping arrived in Pyongyang on Thursday, June 20. Xi will be in North Korea for two days. Xi is the first Chinese leader to visit the reclusive state in 14 years.

Beijing has used the trip to mark the 70th anniversary of diplomatic relations between the two countries. China sees North Korea as a strategic buffer that is keeping the 28,500 US troops in South Korea away from its borders. The trip also demonstrates to the United States, China’s influence in the region.

Meanwhile, Hong Kong and Singapore dual-listed Fortune Real Estate Investment Trust (SGX: F25U) wishes to delist from the mainboard of the Singapore stock exchange, citing low trading volume, administrative and compliance costs as reasons for its decision. Fortune REIT has 374.9 million units listed here, which comprise around 19.4% of its total units in issue.

Facebook has unveiled its plans to launch a cryptocurrency called Libra. The social media giant has 28 partners in a Geneva-based entity called the Libra Association, which will govern the new digital coin. On top of that, Facebook has created a subsidiary called Calibra, which allows users to save, send and spend Libras through a digital wallet. A basket of securities will fully back Libra. Facebook said that it hoped to have 100 members by the time Libra is launched.

Indonesia’s finance minister said that it plans to cut several different taxes to boost investments and accelerate economic growth. South-east Asia’s biggest economy grew 5.07% in the first quarter from a year ago, missing analysts expectations and below the government’s 5.3% growth target.

The government raised the price threshold at which luxury sales tax is applied to houses and apartments. The 20% tax now only applies to properties worth upwards of Rp 30 billion (S$2.87 million), up from the previous threshold of Rp 20 billion for landed property and Rp 10 billion for an apartment. The income tax rate for infrastructure-related securities will be cut to 5% from 15%.

American Global investment management corporation, BlackRock, has announced that it is shorting the Australian dollar, as it expects the central bank to cut rates to as low as 0.5% to boost Australia’s struggling economy. BlackRock expects the Aussie dollar to extend its decline and fall to as low as 65 US cents next year. The Aussie dollar fell to 68.32 US cents on Tuesday, 18 June.

Lastly, home prices in China’s 70 major cities rose 0.7% in May from the previous month, the fastest pace of growth in five months. Remarkably, it marked the 49th straight month of price gains, with 67 of the 70 cities reporting higher prices in May. Home prices rose 10.7% from a year ago.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Jeremy Chia owns units of Facebook Inc and Fortune Real Estate Investment Trust. The Motley Fool Singapore has a recommendation on Facebook Inc.