Friday 25 June 2021 ,
Friday 25 June 2021 ,
Latest News
  • Bangladesh reports 6,058 fresh cases, 81 deaths from COVID-19
  • Bangladesh reports 6,058 fresh cases, 81 deaths from COVID-19
18 August, 2017 00:00 00 AM
Print

US can ‘be patient’ in raising rates, Fed members say

AFP

AFP, WASHINGTON: US central bankers remain divided over inflation risks, and some argue they can afford to "be patient" before raising rates again, according to the minutes of the last policy meeting released on Wednesday.

The Federal Reserve had been expected to raise the benchmark lending rate a third time this year, but the minutes of the July 25-26 meeting showed policymakers remained befuddled by weak inflation, despite historically low unemployment.

The minutes indicated the Fed could announce "relatively soon" the start of efforts to reduce the central bank's multi-trillion-dollar investment holdings.

They also showed Fed some members increasingly believed an era of inflation was settling in for the long haul, leaving policymakers increasingly torn in different directions.

Amid steady job creation and the falling jobless rate, the Fed has dismissed weak price pressures, blaming them on one-off "transitory" and "idiosyncratic" factors, such as falling mobile phone plan and medication prices.

But after raising rates twice this year, with a third increase expected before the end of 2017, policymakers have found themselves hard pressed to explain the absence of inflation. Over the second quarter, inflation measures have remained weak or even retreated.

On one hand, some meeting participants feared that

persistently low interest rates could create financial instability and spur risk taking. Others believed the low inflation

justified allowing the economy to run hotter before hiking again.

As a group, Fed members generally believe inflation will remain low through the second half of 2017, with many believing it will stabilise "over the next couple of years from its current low," according to the minutes.

"Many participants, however, saw some likelihood that inflation might remain below two percent for longer than they currently expected, and several indicated that risks to the inflation outlook could be tilted to the downside," the minutes said.

The dollar nosedives

Those pointing to low inflation said the central bank should "be patient" before adopting its next rate hike "until incoming information confirmed that the recent low readings on inflation were not likely to persist."

Fed members were again concerned by the dizzying heights to which Wall Street has risen since President Trump prevailed in November's presidential elections, suggesting too much easy money had encouraged market speculators.

"The staff warning about asset prices is hawkish, but the doves carried the day in July," Chris Low of FTN Financial said in a client note.

The minutes also suggested that as soon as its next meeting in September the central bank could announce the start of a process of drawing down its $4.5 trillion asset holdings, ending a stimulus policy put in place after the 2008 financial crisis.

Since then, the Fed has used the returns on investments in government bonds to purchase yet more bonds but policymakers decided earlier this year the time was ripe for the policy to come to an end.

Comments


Copyright © All right reserved.

Editor : M. Shamsur Rahman

Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

Editor : M. Shamsur Rahman
Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

Disclaimer & Privacy Policy
....................................................
About Us
....................................................
Contact Us
....................................................
Advertisement
....................................................
Subscription

Powered by : Frog Hosting