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7 Jan 2015
FOMC Minutes: Hike unlike before April; no complains on USD strenght
FXStreet (San Francisco) - The Federal Reserve would not consider to raise interest rates before April, according to the latest FOMC minutes released today. The officials comments that cheap oil prices and the dollar's strength may mean that the first hike will come when the core inflation is low.
The Fed considers that the decline in the inflation is a temporary situation that is caused by lower energy prices and the stronger dollar. The minutes don't show complains on the USD strenght.
Many participants commented "the international situation as an important source of downside risks to domestic real activity and employment." Most participants saw no clear evidence of a broad-based acceleration in wages.
Voting for this action: Janet L. Yellen, William C. Dudley, Lael Brainard, Stanley Fischer, Loretta J. Mester, Jerome H. Powell, and Daniel K. Tarullo.
Voting against this action: Richard W. Fisher, Narayana Kocherlakota, and Charles I. Plosser.
Key Quotes
With lower energy prices and the stronger dollar likely to keep inflation below target for some time, it was noted that the Committee might begin normalization at a time when core inflation was near current levels, although in that circumstance participants would want to be reasonably confident that inflation will move back toward 2 percent over time.
Although a few participants suggested that the recent uptick in the employment cost index or average hourly earnings could be a tentative sign of an upturn in wage growth, most participants saw no clear evidence of a broad-based acceleration in wages.
A couple of participants, however, pointing to the weak statistical relationship between wage inflation and labor market conditions, suggested that the pace of wage inflation was providing relatively little information about the degree of labor underutilization.
Many participants regarded the international situation as an important source of downside risks to domestic real activity and employment, particularly if declines in oil prices and the persistence of weak economic growth abroad had a substantial negative effect on global financial markets or if foreign policy responses were insufficient.
The Fed considers that the decline in the inflation is a temporary situation that is caused by lower energy prices and the stronger dollar. The minutes don't show complains on the USD strenght.
Many participants commented "the international situation as an important source of downside risks to domestic real activity and employment." Most participants saw no clear evidence of a broad-based acceleration in wages.
Voting for this action: Janet L. Yellen, William C. Dudley, Lael Brainard, Stanley Fischer, Loretta J. Mester, Jerome H. Powell, and Daniel K. Tarullo.
Voting against this action: Richard W. Fisher, Narayana Kocherlakota, and Charles I. Plosser.
Key Quotes
With lower energy prices and the stronger dollar likely to keep inflation below target for some time, it was noted that the Committee might begin normalization at a time when core inflation was near current levels, although in that circumstance participants would want to be reasonably confident that inflation will move back toward 2 percent over time.
Although a few participants suggested that the recent uptick in the employment cost index or average hourly earnings could be a tentative sign of an upturn in wage growth, most participants saw no clear evidence of a broad-based acceleration in wages.
A couple of participants, however, pointing to the weak statistical relationship between wage inflation and labor market conditions, suggested that the pace of wage inflation was providing relatively little information about the degree of labor underutilization.
Many participants regarded the international situation as an important source of downside risks to domestic real activity and employment, particularly if declines in oil prices and the persistence of weak economic growth abroad had a substantial negative effect on global financial markets or if foreign policy responses were insufficient.