FOMC Minutes Preview: Expect minutes to explain future course of rate hikes

By FXStreet FXStreet (Mumbai) – At its December 15-16 meeting the US Federal Reserve decided to end its zero interest rate regime that was held steady for almost a decade. The Fed finally raised increased the Fed funds target range by +25bps to 0.25%-0.5%. Fed chair Yellen declared that the pace of subsequent rate hike would be gradual and dependent on incoming economic data. Yellen, at the post meeting press conference stressed that “future policy actions will obviously depend on how the economy evolves.”

The FOMC expects economic conditions to evolve in a manner that will warrant gradual increases in rate. The Committee said rates will be raised at ‘every other meeting’. The FOMC thus intends to hike four times in 2016 by 25 bps each. John Williams. Fed President of San Francisco sees three-to-five hikes this year if the economy manages to stick to expected track. Thus for now, ‘gradual’ stands for four rate hikes in 2016 and four in 2017. Markets, on the other hand expect the Fed to raise rates only twice this year.

Going forward, the Fed said it will decide on the timing as well as the size of future adjustments only after examining both realized and …read more

Source:: FX Street