US Close 17 Mar 16: Markets higher after Fed Res minutes as the expectations for higher rates reduced

2016-03-17

The completion of the two day FOMC meeting resulted in the US Federal Reserve keeping interest rates on hold. However the profile for the fed funds rate over 2016 was reduced from four to two rate hikes, (end 2016 fed funds rate to be at 0.9%, down from 1.4% in December). The accompanying news conference was certainly more dovish with the Fed suggesting that the global economy and financial developments continue to pose risks and that the Fed was comfortable with a lower interest profile to achieve growth outcomes.

The completion of the two day FOMC meeting resulted in the US Federal Reserve keeping interest rates on hold. However the profile for the fed funds rate over 2016 was reduced from four to two rate hikes, (end 2016 fed funds rate to be at 0.9%, down from 1.4% in December). The accompanying news conference was certainly more dovish with the Fed suggesting that the global economy and financial developments continue to pose risks and that the Fed was comfortable with a lower interest profile to achieve growth outcomes.

The FOMC forecasts: Inflation was downgraded from 1.6% to 1.2% for 2016, with an expectation of a lift to 1.9% in 2017 and 2% in 2018. The projection for economic growth was downgraded in 2016 from 2.4% to 2.2%. GDP projections for 2017 fell by 0.1% to 2.1%. Unemployment was expected to ease to 4.7% in 2016 and 4.6% for 2017.

* In US economic news, consumer prices fell by 0.2% in February to be up 1% over the year. Core prices rose 0.3% to be up 2.3% over the year. US housing starts rose by 5.2% in February to a seasonally adjusted annual pace of 1.18 million - the highest level since September.

Comments (3)