Members of the US Federal Reserve expressed different views about when to begin normalising interest rates, according to the minutes of the latest Federal Open Market Committee meeting.
The minutes from the meeting on March17-18 said: “Several participants judged that the economic data and outlook were likely to warrant beginning normalisation at the June meeting.
“However, others anticipated that the effects of energy price declines and the dollar’s appreciation would continue to weigh on inflation in the near term, suggesting that conditions likely would not be appropriate to begin raising rates until later in the year, and a couple of participants suggested that the economic outlook likely would not call for liftoff until 2016.”
Interest rates have been at record lows for the past few years, with the committee targeting a return to 2 per cent through a process of “normalisation”.
At its most recent meeting the FOMC also discussed how to communicate the timing of the first rate rise when it happens.
It revealed that two participants thought the committee should “seek to signal its policy intentions at the meeting before liftoff appeared likely”, while another two members suggested that would be “inconsistent with a meeting-by-meeting approach”.
The FOMC minutes added: “Some participants emphasised that the stance of policy would remain highly accommodative even after the first increase in the target range for the federal funds rate, and several noted that they expected economic developments would call for a fairly gradual pace of normalisation or that a data-dependent approach would not necessarily dictate increases in the target range at every meeting.”
The Federal Reserve dropped its use of the word “patient” from its February meeting, prompting speculation as to whether the first rate hike in the US will come in June or September this year.
