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Fed not likely to raise interest rates in the near future

Wednesday, Feb 18 2015

Latest FOMC Meeting Minutes showed that members are keen on keeping rates at zero "for a longer time," than wanted an earlier move, according to minutes from the January meeting released Wednesday that suggested the majority is in no real hurry to hike interest rates. "Many" on the Fed members said a premature rate hike would harm the recovery, while only "several" thought a later move would risk high inflation. The minutes show deep concern among Fed officials about dropping the guidance that it can be "patient" in hiking rates.

Many Fed officials are worried that when the word "patient" is dropped, markets will think the Fed is poised to move on "an unduly narrow range of dates," the minutes said. This could create "undesirably tight" financial conditions. There was some discussion about possible changes to the guidance that might keep markets from overreacting, but no details were provided. The minutes show Fed officials had different ideas about the economic conditions that would be appropriate for the first rate hike.

 

After the data USD was pushed sharply down with euro currently being traded few points above 1.1380 level, Sterling around 1.5460 area and Aussie slightly below 0.7820 level.

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