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8 Jan 2015
FOMC minutes: Foreign economic developments the main risk – Danske
FXStreet (Barcelona) - Signe Roed-Frederiksen, of Danske Bank, shares that the minutes show that Committee participants were more worried about foreign economic and financial developments than could be read out of the statement.
Key Quotes
“At the time of the FOMC meeting, many participants saw the main downside risk to the US economic outlook stemming from the volatility created by the drop in oil prices and persistent weak growth across the Atlantic. In particular, risks would increase if this had a substantial negative effect on global financial markets or if foreign policy responses were insufficient.”
“However, given the net positive impact on US growth from lower gasoline prices and general solid momentum in the labour market, so far, risks to growth were seen as nearly balanced.”
“Second, as also mentioned in the statement and at the following press conference, the decline in inflation was generally seen as temporary.“
“Finally, the decision to update the forward guidance was mainly an attempt to give the FOMC more flexibility in adjusting the Fed funds rate to incoming data. We continue to expect the first Fed funds rate hike in June this year.”
Key Quotes
“At the time of the FOMC meeting, many participants saw the main downside risk to the US economic outlook stemming from the volatility created by the drop in oil prices and persistent weak growth across the Atlantic. In particular, risks would increase if this had a substantial negative effect on global financial markets or if foreign policy responses were insufficient.”
“However, given the net positive impact on US growth from lower gasoline prices and general solid momentum in the labour market, so far, risks to growth were seen as nearly balanced.”
“Second, as also mentioned in the statement and at the following press conference, the decline in inflation was generally seen as temporary.“
“Finally, the decision to update the forward guidance was mainly an attempt to give the FOMC more flexibility in adjusting the Fed funds rate to incoming data. We continue to expect the first Fed funds rate hike in June this year.”