Fed officials in no rush to change interest rates

26 May, 2019 12:00 AM printer

Washington: Federal Reserve officials signalled that they were in no rush to change interest rates even if the economy continued to strengthen, according to minutes from their April 30 to May 1 policy meeting, and some were worried about persistently low inflation.

Price increases eased to 1.6 per cent annually in March, well below the Fed's goal of 2 per cent. Inflation has not sustainably reached the Fed's target since the central bank formally adopted it in 2012, and has been languishing below the dividing line for much of the past quarter-century, report agencies.

"In light of recent, softer inflation readings, some viewed the downside risks to inflation as having increased," according to the minutes of the meeting, which were released after a typical three-week delay.

That is contributing to the Fed's wait-and-see approach to changing interest rates.

"Participants noted that even if global economic and financial conditions continued to improve, a patient approach would likely remain warranted, especially in an environment of continued moderate economic growth and muted inflation pressures," the minutes said.

Members of the rate-setting Federal Open Market Committee said that "a patient approach to determining future adjustments to the target range for the federal funds rate would likely remain appropriate for some time". Fed policymakers left rates unchanged at the meeting, continuing a wait-and-see approach that they adopted early this year.

The central bank lifted rates nine times between the end of 2015 and the end of last year, with four of the increases coming under chairman Jerome Powell.

Those moves have drawn criticism from President Donald Trump, who has called the Fed a threat to the US economy and a drag on growth and has urged it to start lowering rates. Mr Powell, whom Mr Trump chose to lead the central bank, has repeatedly highlighted that the Fed is independent of the White House and said that it does not allow politics to influence its decisions.