It said another boost in interest rates might be warranted before long, but investors doubt that will happen in September and they’re not sure if it will happen in the months after that.
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USA stocks ended slightly higher on Wednesday after minutes from the Federal Reserve’s last policy meeting showed voting members divided over whether to raise interest rates soon.
“The September meeting rate hike has undoubtedly been put back on the table because of the impressive labor results, but we continue to feel that the Fed will postpone a rise in the funds rate”, Brett Ewing, owner and chief market strategist at First Franklin Financial Services, wrote in a research note Wednesday.
But a September rate rise is “possible,” according to William Dudley, president of the Federal Reserve Bank of NY. However, the minutes from the July meeting seemed to pour cold water on the idea of a September rate hike.
“A few participants pointed out that various benchmarks for assessing the appropriate stance of monetary policy supported taking another step in removing policy accommodation”.
Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, US June 9, 2016.
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The minutes of their July 26-27 meeting, released Wednesday, show that officials were encouraged by a rebound in job growth.
In addition to lingering problems in Europe, some officials noted weakness in other parts of the global economy, including uncertainties over China’s currency policies and the growth in Chinese debt. St. Louis Fed President James Bullard spoke Wednesday and he sees little, if any, change to the Fed’s key interest rate because returns on US bonds are so low and workers’ productivity isn’t growing quickly.
And since The fed meeting, stock-strength-driven rate-hike odds have mirrored the collapse of economic growth expectations…
The Fed raised its target range for the federal funds rate by 25 basis points to 0.25-0.5 percent in December, the first rate hike in almost a decade.
The Federal Reserve ended 2015 by raising the key target federal funds rate for the first time in almost a decade.
USA stocks are closing slightly higher Wednesday after minutes from the Federal Reserve’s last policy meeting signaled to investors that the central bank isn’t in a rush to raise rates.
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While many Fed officials wanted to see additional signs of prices increasing, other officials made the case that the labor market has come close to capacity, arguing the Fed should act sooner rather than later. Still, it said it planned to monitor global economic threats and financial developments to ensure that they don’t slow the economy. Economists see the December meeting as the most likely time for a rate increase since it follows the US presidential election, according to a Reuters poll last week.
