Fed in March discussed 'slightly steeper' future rate hikes

Can Volatility Push NZD  USD Above Key Resistance as US CPI Looms

Can Volatility Push NZD USD Above Key Resistance as US CPI Looms

US Federal Reserve officials signalled that the central bank may have to accelerate the pace of future rate hikes amid stronger economic growth and inflation, according to the minutes of the Fed's latest monetary policy meeting.

Minutes of the Fed's policy meeting, released on Wednesday, showed they still expected the economy to strengthen, as tax cuts and increased government spending provide a boost.

Business contacts in numerous Fed's 12 regions reported concern about the tariffs, with the agriculture sector "feeling particularly vulnerable to retaliation", the minutes said.

Private analysts noted that this discussion in the minutes marked the first time since the Great Recession that the central bank has discussed the possibility of adjusting interest rates to actually restrain economic growth.

Some members of the Federal Reserve are urging the bank to consider raising interest rates more quickly, in what could mark a turn from its gradual approach in recent years.

The March policy meeting was the first under new chair Jerome Powell. The Fed's next meeting is May 1-2.

The Fed is expected to keep rates unchanged at its next policy meeting on May 1-2, but investors overwhelmingly see another rate increase at the following one in mid June.

Inflation, which has lagged the Fed's 2-percent target for years, has also begun to pick up in recent months, and Fed officials expect it to finally hit that goal and perhaps exceed it by next year, if not before.

Kaplan said he expects the US economy to grow by 2.5-2.75 percent this year, unemployment to go lower and inflation to gradually pick up towards the 2 percent target. He succeeds Janet Yellen, who was not offered a second term by President Donald Trump.

"A strong majority of participants viewed the prospect of retaliatory trade actions by other countries, as well as other issues and uncertainties associated with trade policies, as downside risks for the US economy", the minutes read.

"Participants did not see the steel and aluminium tariffs, by themselves, as likely to have a significant effect on the national economic outlook, but a strong majority of participants viewed the prospect of retaliatory trade actions by other countries, as well as other issues and uncertainties associated with trade policies, as downside risks for the United States economy", the minutes said. The officials believed that the $1.5 trillion tax cut that Trump pushed through Congress in December and a February budget deal that increased government spending over the next two years would boost overall growth.

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