US Federal Reserve may delay rate hikes

The US Federal Reserve could delay an increase in interest rates after a recent Federal Open Market Committee (FOMC) meeting. Wall Street stocks rose after the news.

Optimistic outlook from Fed

In minutes from the FOMC latest meeting, many Fed members noted that global factors and US market volatility may affect rate hikes in the future.

‘Concerns over escalating trade tensions, global growth prospects, and the sustainability of corporate earnings growth were among the factors that appeared to contribute to a significant drop in US equity prices,’ said the minutes.

‘Many participants expressed the view that, especially in the environment of muted inflation pressures, the FOMC could afford to be patient about further policy firming,’ the minutes revealed.

Though the Fed increased interest rates in December, the volatility that ensued in the US markets led Fed chair, Jerome Powell, to say that he will pay attention to the markets before raising interest rates.

How Fed will move forward

The Fed seems dovish for now, but may change if the economy remains strong.

‘Though financial conditions had tightened and global growth had moderated, [voting] members generally anticipated that growth would remain above trend and the labor market would remain strong,’ the minutes said.

‘If incoming information prompted meaningful reassessments of the economic outlook and attendant risks, either to the upside or the downside, their policy outlook would change,’ added the minutes.

Financial experts believe that the FOMC meeting minutes mean that the Fed will slow down interest rate hikes, which may help Wall Street. Mike Loewengart, head of investment strategy at E-Trade is hopeful about the latest Fed news.

‘These minutes are the clearest signal we’ve received that the Fed will slow down the rate hike pace, which is what the markets have seemed hungry for,' said Loewengart. ‘And the fact that a few Fed officials didn’t even want December's hike show which way the wind is blowing.’