Fed Minutes: Concerns Over Strong Dollar

The Federal Open Market Committee debated whether the current language painted the wrong picture on the timing of rate hikes, with the outcome being agreement that rate hikes would depend on data and not a calendar date, according to minutes released Wednesday.

Fed staff also cut their growth outlook due to the higher dollar, as a number of committee participants expressed concern about global weakness.  Most members of the committee want the current guidance clarified to emphasize that the timing of a rate hike is data dependent, according to the minutes. Concerns were raised that the current language could be misunderstood as a commitment.

“The concern was raised that the reference to ‘considerable time’ in the current forward guidance could be misunderstood as a commitment rather than as data dependent,” the minutes said.  “It was emphasized that the current forward guidance for the federal funds rate was data dependent and did not indicate that the first increase in the target range for the federal funds rate would occur mechanically after some fixed calendar interval following the completion of the current asset purchase program,” the statement added.

CNBC

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.