USD and US Interest Rates Headed North after FOMC Minutes – Westpac
Martina Song, Research Analyst at Westpac, notes that the US dollar and
US interest rates rose sharply after the minutes of the Fed’s 26/27
April meeting were released.
Key Quotes
“The minutes said a June hike was “likely” if the Q2 data improved,
surprising markets. The FOMC minutes signalled that Q2 developments in
labour data, growth, and inflation were key: “Most participants judged
that if incoming data were consistent with economic growth picking up in
the second quarter, labor market conditions continuing to strengthen,
and inflation making progress toward the Committee's 2 percent
objective, then it likely would be appropriate for the Committee to
increase the target range for the federal funds rate in June.”
There is ample opportunity for the Fed to expand on this over the next
two weeks, with a plethora of Fed governors and regional presidents to
speak, including Chair Yellen, NY Fed President Dudley and Vice Chair
Fischer.”
