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23
February 2017
The
Federal Reserve said the economys continued growth might convince it to raise
its benchmark interest rate "fairly soon" due to the ambitious
policies proposed by President Donald Trump that may have unforeseen effects,
the media reported. The Total
Investment & Insurance Solutions
The Federal
Reserve made the statement on Wednesday after officials spent their meeting
three weeks ago consumed with the changes brought on by a new administration in
the White House, NBC News reported. The
Total Investment & Insurance Solutions
The
Federal Open Market Committee - the central bank's policymaking arm - discussed
at length the impact from lower taxes and regulations and higher domestic
spending under President Trump, according to minutes of the January 31 -
February 1 session.
The
meeting was the first since Trump took office on January 20.
The
President's name was never mentioned in the minutes, but the broad brushes of
his agenda show up often, according to sources. The Total Investment & Insurance Solutions
"Many
participants expressed the view that it might be appropriate to raise the
federal funds rate again fairly soon" if data on jobs and inflation are
"in line with or stronger than their current expectations", or if the
risk increased that the Fed might overshoot its goals, the meeting summary
stated.
Jobs
numbers indeed have been solid and the Consumer Price Index inflation indicator
is at its highest level in years, NBC News reported. The Total Investment & Insurance Solutions
The US
Treasury yield curve flattened slightly following the minutes' release, with
the short-term two-year note yield trading higher, near 1.23 per cent, and the
benchmark 10-year note yield slipping to 2.41 per cent. The Total Investment & Insurance Solutions
One
example of the policy dilemma was "upside risks" that would come with
"more expansionary fiscal policy or a more rapid build-up of inflationary
pressures," as well as the downside risks of an appreciating US
dollar. The Total Investment &
Insurance Solutions
Ultimately,
the Fed decided not to act on rates until they had a clearer view on the
effects the new policies would have.
The Total Investment & Insurance Solutions
"Most
participants continued to see heightened uncertainty regarding the size,
composition, and timing of possible changes to fiscal and other government
policies, and about their net effects on the economy and inflation over the
medium term, and they thought some time would likely be required for the
outlook to become clearer," the minutes added.The Total Investment & Insurance Solutions
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