Wednesday preview: FOMC meeting minutes take centre stage

The Federal Reserve on Wednesday releases the minutes of last month’s meeting, providing more details behind the central bank’s decision to keep interest rates unchanged.

The central bank announced it would maintain the federal funds rate at 0.25% to 0.5% following its 15-16 March policy meeting, citing low inflation and concerns about the risks of global economic and financial developments.

Fed Chair Janet Yellen last Tuesday urged caution on raising interest rates as a slowdown in emerging markets and falling commodities prices has weighed on the rest of the globe.

She said “caution is especially warranted” as inflation remains below the 2% target. The Fed's preferred annual measure of inflation came in flat at 1.7% in February.

“There is a widely held belief in the market that Yellen would prefer an overshoot in inflation rather than risk tightening monetary policy settings too soon,” according to Rabobank.

“This belief is drawn from the asymmetric position of policy settings, with there being far more upside room for manoeuvre on interest rates if inflation were to shoot beyond the 2% level.”

Yellen’s dovish remarks prompted many analysts to rule out a rate hike in April.

The market will now be looking for clues on the timing of the next interest rate increase in Wednesday’s meeting minutes.

December was the last time the Fed raised rates. It was also the first time in nearly a decade.

Wednesday 06 April

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