Short Term Stimulus Seen as Less Likely

Federal Reserve policy meeting minutes indicated that the central bank will not be increasing monetary stimulus soon. This decrease in prospective liquidity was followed by a dollar rally and a rise in the treasury yield. The Fed indicated that slower price growth or faltering economic expansion might prompt reassessment.

This is contrasted with continuing uncertainty regarding the European economy. Attention has been particularly focused on Spain, which just recorded the eighth month in a row of increasing unemployment. This has been accompanied by deep austerity measures. The ECB meets tomorrow to decide interest rates for the shared currency and Bloomberg-surveyed economists expect no change.

Source: Bloomberg

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