(MENAFN- Trend News Agency ) Baku, Azerbaijan, March 22
By Ilkin Shafiyev – Trend:
An increase in the key interest rate of the US Federal Reserve System (Fed) will not have a tangible impact on the rate of the Azerbaijani manat, Muslim Ibrahimov, doctor of economic sciences, expert in economic issues, said.
Following the meeting on March 20-21, the Fed decided to raise the federal funds rate by 25 basis points to 1.5-1.75 percent per annum. The FOMC rate decision coincided with the forecasts of the vast majority of economists and market participants. In 2018, the Fed plans to raise the rate twice more.
"An increase in the key interest rate is not unexpected, as it was already announced that it will be raised by several times in 2018,' Ibrahimov told Trend. 'That is, in principle, an increase was expected, and the economies of many countries were ready for this."
Muslimov added that the rate change does not have a direct impact on the economy of Azerbaijan.
At the same time, an increase in Fed key rate may have a negative impact on oil prices.
"While the oil-producing countries are discussing the extension of the OPEC + agreement, which is aimed at stabilizing the market, an increase in the Fed rate will help reduce oil prices because all oil trading operations are conducted in dollars," he said.
In December 2016 at the meeting of oil producers in Vienna, 11 non-OPEC member countries (including Azerbaijan) agreed to cut the oil production by a total of 558,000 barrels a day. The agreement was concluded for the first half of 2017 and was extended until the end of the first quarter of 2018 at the meeting on May 25,2017.
At the last OPEC meeting in Vienna, the agreement was again extended until the end of 2018. Azerbaijan supported the decision.
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