FXStreet (Barcelona) – Analysts at UOB Group, review the FOMC Minutes, noting that the accounts of the June meeting reflected the Fed’s cautious approach on the US economy and job recovery.
Key Quotes
“The minutes from its 16-17 June 2015 FOMC meeting on Wednesday (9 July, Thursday 2am Singapore time) showed that FOMC policy makers “saw economic conditions as continuing to approach those consistent with warranting a start to the normalization of the stance of monetary policy” but there remains hesitation to make the decision to normalize rates as all but one FOMC member “indicated that they would need to see more evidence that economic growth was sufficiently strong”.”
“There was also concerns about weakness in the US consumer spending, “the likely pace of economic growth abroad, particularly in China and other emerging economies” and a specific mention that “many participants expressed concern that a failure of Greece and its official creditors to resolve their differences could result in disruptions in financial markets in the euro area, with possible spillover effects on the United States” suggesting a worsening in the Greece debt crisis may delay the Fed lift-off schedule, and may see significant paring back of rate hike expectations in September FOMC.”
“Market’s key takeaway from the minutes is that the Fed is positive but still cautious about the US economic & jobs recovery, domestic price developments and also on external developments, resulting in a cautious approach to raising interest rates [Dovish].”
“After the FOMC minutes, the markets will now divert their attention to Fed Chair Janet Yellen’s speech on the US economic outlook in Cleveland this Friday (10 Jul) as this will be seen as a preview to her upcoming semi-annual testimonies to US lawmakers next week (15-16 Jul). Of course, the complication will come from the Greece bailout ultimatum that will be decided by this Sunday (12 Jul) which unfortunately comes ahead of Yellen’s Congress testimonies.”
(Market News Provided by FXstreet)