9 Apr 2015
Inflation, dollar and FOMC minutes – UOB Group
FXStreet (Edinburgh) - Analysts at UOB Group reviewed the recent publications of the FOMC minutes regarding the inflation figures and the strong dollar.
Key Quotes
“The minutes also reveal what would make Fed officials “reasonably confident” that inflation will move back up toward the 2% objective in the medium term (a condition for a rate increase), highlighting that “further improvement in the labor market, a stabilization of energy prices and a leveling out of the foreign-exchange value of the dollar were all seen as helpful in establishing confidence that inflation would turn up.”
“That said, the minutes also noted that “there were no simple criteria for such a judgment, and, in particular, that, in a context of progress toward maximum employment and reasonable confidence that inflation will move back to 2 percent over the medium term, the [rate] normalization process could be initiated prior to seeing increases in core price inflation or wage inflation.”
“The strength of the US dollar was also discussed, and “several participants noted that the dollar’s further appreciation over the intermeeting period was likely to restrain U.S. net exports and economic growth for a time.”
Key Quotes
“The minutes also reveal what would make Fed officials “reasonably confident” that inflation will move back up toward the 2% objective in the medium term (a condition for a rate increase), highlighting that “further improvement in the labor market, a stabilization of energy prices and a leveling out of the foreign-exchange value of the dollar were all seen as helpful in establishing confidence that inflation would turn up.”
“That said, the minutes also noted that “there were no simple criteria for such a judgment, and, in particular, that, in a context of progress toward maximum employment and reasonable confidence that inflation will move back to 2 percent over the medium term, the [rate] normalization process could be initiated prior to seeing increases in core price inflation or wage inflation.”
“The strength of the US dollar was also discussed, and “several participants noted that the dollar’s further appreciation over the intermeeting period was likely to restrain U.S. net exports and economic growth for a time.”