The Fed acknowledges “uncertainty and risks present in the inflation outlook”

By FXStreet FXStreet (Mumbai) – The minutes of the US Federal Reserve’s December 15-16 meeting was published yesterday. The Fed had in its December meeting raised the interest rates from record low levels for the first time in a decade, thereby ending its zero rate regime. The Fed had declared it will hike rates 25 bps four times in 2016. It had stressed that the subsequent rate hikes will be gradual and data dependent.

The minutes confirmed the FOMC definitely sees inflation rising to its 2 percent target over the medium term. However, it also highlighted some FOMC members during the meeting had flagged the risks related to achieving inflation target. The minutes mentioned the “significant concern about still-low readings on actual inflation” as well as the “uncertainty and risks present in the inflation outlook,” the minutes said. The FOMC therefore felt the need to closely assess the progress of inflation to ensure inflation was rising in the expected manner. ‘In light of the current shortfall of inflation from 2 per cent, the Committee will carefully monitor actual and expected progress toward its inflation goal’, the minutes stated.

The minutes also drew attention to other downside risks to inflation such as shock from oil …read more

Source:: FX Street