US Fed Officials Worried About Raising Rates Too Soon

Posted by: : Paul EbelingPosted on: February 18, 2015 US Fed Officials Worried About Raising Rates Too Soon
 

US Fed Officials Worried About Raising Rates Too Soon

The US Federal Reserve (FOMC) policymakers expressed concern last month that raising interest rates too soon could pour cold water on the US economic recovery, and fretted over the impact of dropping “patient” from the central bank’s interest rate guidance.

At the Fed’s last policy-setting meeting in January, the officials debated the impact that stubbornly low inflation measures were having on the central bank’s confidence in moving ahead with raising rates.

They also noted how China’s economic slowdown and tensions in the Middle East and Ukraine posed downside risks to the US economic growth outlook, according to minutes from the Federal Open Market Committee’s 27-28 January meeting.

Fed officials maintained that a decision on when to raise rates would remain dependent on economic data, though how early to move appears to be cause for concern.

“Many participants observed that a premature increase in rates might damp the apparent solid recovery in real activity and labor market conditions, undermining progress toward the committee’s objectives,” said the minutes, which were released Wednesday afternoon.

The FOMC repeated in January that it will be “patient” in deciding when to raise benchmark borrowing costs from Zero and acknowledged a decline in certain inflation measures. The minutes show that many participants in the policy meeting feared that dropping “patient” – whenever the time comes – risks shifting market expectations of a rate hike to an “unduly narrow range of dates.”

Stay tuned…

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Paul Ebeling

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Paul Ebeling

Pattern Recognition Analyst, equities, commodities, forex
Paul Ebeling is best known for his work as writer and publisher of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly-regarded, weekly financial market letter, where he enjoys an international audience among opinion makers, business leaders, and respected organizations. Something of a pioneer in online stock market and commodities discussion and analysis, Ebeling has been online since 1994. He has studied and worked in the global financial and stock markets since 1984.

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