Wednesday preview: Fed releases December policy meeting minutes
The Federal Reserve will shed further light behind December’s decision to raise interest rates with the release of its policy meeting minutes on Wednesday.
The Fed lifted interest rates by 0.25 percentage points on 14 December to between 0.50% and 0.75%. It marked the second increase since the 2008 financial crisis and follows an improving economy and labour market.
The central bank also said it expects to raise short-term rates by another 0.75 percentage points in 2017, most likely in three separate 0.25 percentage point moves. It compares to previously predicted 2017 increase of 0.5 percentage points and two rate increases.
The minutes of the 13-14 December meeting that led to the central bank’s policy decision will reveal how many members of the Federal Open Market Committee backed the move. It may also provide more clues on the timing of the Fed’s next interest rate hike.
Ipek Ozkardeskaya, senior market analyst at London Capital Group, suggested the Fed will be watching this Friday’s non-farm payrolls data for signs of further improvement in the labour market before determining its next policy action.
Economists have forecast employers added 178,000 jobs in December, the same as the previous month.
“Overall, the performance of the US labour market is expected to have softened in December,” said Ozkardeskaya.
“Therefore, as the Fed’s tighter policy has been mostly priced in, we could see a further temporary easing in the US dollar and the US yields depending on the economic data.”
Wednesday 04 January
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