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21 May 2015
FOMC Minutes: June rate hike off the table – MP
FXStreet (Barcelona) - Dean Popplewell, VP of Currency Analysis and Research at MarketPulse, highlights the key aspects of the FOMC Minutes with respect to growth and rate hike expectations among Fed members.
Key Quotes
“There was nothing groundbreaking in yesterday’s April FOMC Minutes. Market price action would suggest that it was rather an uninspired event ticking off most individual’s boxes. With dealers still digesting yesterday’s minutes has temporarily taken some of the wind out of the dollar’s sails.”
“Fed members were perhaps not quite as pessimistic as suggested by the noticeable downgrade to economic conditions in the April’s statement. Notably, most of them thought the poor data were due largely, to “transitory” factors, and most expected to see moderate growth resume. Still, “many” saw a June hike as unlikely because they do not think the data in June would provide sufficient confirmation that the conditions for hiking were in place.”
“Since the late April meeting, U.S economic news has been generally mixed, keeping rate hikes odds favoring a September lift off and possibly as late as December. But there was a lengthy discussion about the possibility that the recent weakness in the pace may persist.”
““A number of participants” suggested that the earlier impact of the dollar strength and weak oil prices could be longer-lasting than anticipated. There was also some concern that the expected boost to consumer spending from lower energy prices may not materialize to the degree anticipated.”
““A few” participants also noted that, in their view, downside risks to growth since the March meeting had increased. Meanwhile, “most” continued to see the risks to growth and the labor market as balanced.”
Key Quotes
“There was nothing groundbreaking in yesterday’s April FOMC Minutes. Market price action would suggest that it was rather an uninspired event ticking off most individual’s boxes. With dealers still digesting yesterday’s minutes has temporarily taken some of the wind out of the dollar’s sails.”
“Fed members were perhaps not quite as pessimistic as suggested by the noticeable downgrade to economic conditions in the April’s statement. Notably, most of them thought the poor data were due largely, to “transitory” factors, and most expected to see moderate growth resume. Still, “many” saw a June hike as unlikely because they do not think the data in June would provide sufficient confirmation that the conditions for hiking were in place.”
“Since the late April meeting, U.S economic news has been generally mixed, keeping rate hikes odds favoring a September lift off and possibly as late as December. But there was a lengthy discussion about the possibility that the recent weakness in the pace may persist.”
““A number of participants” suggested that the earlier impact of the dollar strength and weak oil prices could be longer-lasting than anticipated. There was also some concern that the expected boost to consumer spending from lower energy prices may not materialize to the degree anticipated.”
““A few” participants also noted that, in their view, downside risks to growth since the March meeting had increased. Meanwhile, “most” continued to see the risks to growth and the labor market as balanced.”