March FOMC minutes: Higher federal funds rate expected by the end of this year
The minutes of the March 17-18 FOMC meeting did not yield major surprises.1 There was a considerable disparity of views between FOMC members around the timing of the first rate hike. A number of them argued in favor of a rate hike in June, but the majority appeared to be considering the first fed funds rate hike to be delivered in the second half of the year. Although the committee downgraded its GDP growth projections for the years 2015, 2016 and 2017, 2 it did acknowledge that the US labor market has made enough progress to justify the removal of the “patient” language from the forward guidance of the accompanying statement. As regards the pace of Fed rate tightening after the first hike, the committee made it clear that it will be slow and steady.
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