May FOMC meeting minutes show Fed's patience on rate changes
The FOMC's meeting minutes from May explain why the Federal Reserve is keeping interest rates steady.
The US Federal Reserve is not eager to take any action to cut or raise interest rates. That was the major message from the recently released May Federal Open Market Committee (FOMC) meeting minutes.
Why is the Fed being patient about interest rates?
The Federal Reserve officials voted in April to leave interest rates in the range of 2.25-2.5%. The meeting minutes explained that the Fed exercised patience about interest rates because of a slight improvement in the US economy.
‘Members observed that a patient approach to determining future adjustments to the target range for the federal funds rate would likely remain appropriate for some time, especially in an environment of moderate economic growth,' noted the minutes.
The FOMC minutes also showed that while there is optimism about the US economy, some Fed officials voted against interest rate hikes because of concern about global economic concerns and low inflation.
‘Other sources of uncertainty remained. In light of global economic and financial developments as well as muted inflation pressures,' there would be a pause in interest rate increases, according to the meeting minutes.
Will the Fed cut interest rates in the future?
While US President, Donald Trump, wants the Fed to lower interest rates, the May FOMC meeting minutes show that is unlikely to happen soon. Mark Hamrick, an economic analyst, said that investors shouldn’t expect the Fed to listen to Trump.
‘While some investors are betting that the Federal Reserve will be cutting rates by the end of this year, there’s not a lot in the minutes to support that case,' said Hamrick.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Federal Reserve meeting
Find out how the Fed affects the markets ahead of the FOMC meeting taking place between 18 - 19 June 2019.
- How might the next Fed meeting affect traders?
- What was decided at the last Fed meeting?
- How does the FOMC announcement usually affect the dollar?
Live prices on most popular markets