The Fed is over against the haste in further tightening of monetary policy

The Fed is over against the haste in further tightening of monetary policy

The Fed is over against the haste in further tightening of monetary policy

The FOMC minutes for the previous meetings of this structure, which was held in March 2016 were published on the 6th of April. According to the opinion of the majority of the open market Committee, it isn’t necessary to raise the rates at a future meeting, which is supposed to be held at the end of April of the current year.

According to some members of the FOMC, a new rates increment might be misinterpreted by the markets. In particular, the Fed believes that investors may perceive such a move as a desire of the Central Bank of the United States to tighten the monetary policy more rapidly, which is impossible under the current circumstances.

The majority of the members of open market Committee called for more cautious steps in respect of the rates, as macroeconomic risks to the U.S. are still remain. In addition, conditions in the global economy have also deteriorated markedly.

In particular, the situation in the world economy represents a significant risk to the United States as it has been stated under the Protocol. Moreover, such data is received both within the country and outside. What is more, according to the participants, the decline, which was observed at the beginning of this year, although it was temporary, still has an impact on the U.S. economy. Under such circumstances it seems to be unnecessary to rush with the rate hikes.

Several Fed officials expressed the opinion that the factors that have a negative impact on the US economy will evaporate gradually. Considering all of the above and the forecasts in terms of growth of the US economy, some Fed officials believe that the issue of rate hikes should be approached with caution. In addition, the rate hike would be an unwarranted signal to markets.

Many members of the fed agree that further rate hikes should take place at more modest pace. Furthermore, in line with forecasts, this situation may continue within the next two years.

So, what is shown by the protocols of the Fed? First and foremost is that the US central bank currently has even softer views than investors expect. Once these data has been published, the striving for risks was observed in the markets.


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