nsucurrent.com March 20, 2018

Federal bank maintains rate hike amid economic slowdown, rise in inflation

25 May 2017, 02:01 | Ruby West

U.S. Treasury yields fell to session lows on Wednesday after the Federal Reserve's minutes on its May 2-3 meeting signaled that the central bank remains on a gradual approach to raise interest rates and reduce its bond reinvestment.

While the yield curve flattened, the S&P 500 closed at a record high after minutes from the USA central bank's May 2-3 policy meeting indicated the Fed would gradually raise rates and wind down its $4.5 trillion of bond holdings.

Investors are also awaiting more details regarding the Fed trimming its $4.5 trillion balance sheet.

The Fed had forecast raising interest rates three times this year if the economy remained steady.

"Most participants judged.it would soon be appropriate", to raise rates if the economy stays on track, according to the minutes.

The central bank raised rates in March and December, amid a wave of optimism in the early days of Trump's term, with his promises of tax cuts, deregulation and big infrastructure spending.

Policy makers agreed that they should provide additional details of the plan "soon" and almost all said it would be appropriate to start the process this year, provided their expected path for rate hikes stays on track. Higher rates mean that America has to pay more to borrow, and the combination of more elevated rates and a smaller balance sheet will leave the Fed with lower excess earnings, which it pays back to the Treasury. Nothing in the material the Fed released Wednesday suggested otherwise. The number of properties listed for sale has plunged 9 percent over the past 12 months to 1.93 million.

Fed officials, however, made clear their baseline expectation was for a return to stronger economic growth. A tightening labor market and historically low mortgage rates have helped the housing market recovery. And it shows just how much policy makers would prefer to influence markets through short-term rates than by adjusting their overall debt holdings, which were built up over years of quantitative easing.

"The minutes show that the Fed is going to be cautious and is in no rush to adopt a hawkish tone with respect to their balance sheet", said Naeem Aslam, chief market analyst for Think Markets.

The US central bank now holds around $4.5 trillion in securities, mostly in US Treasury bonds and mortgage-backed securities.

Canada's dollar strengthened to a one-month high against its US counterpart after the Bank of Canada was more upbeat about the economy than some investors expected and as major oil producers looked set to possibly extend production cuts.

U.S. Federal Reserve members appear to be on the same page on to unravel the mammoth stimulus implemented during the 2008-09 financial crisis. Currently, all maturing securities are reinvested by the Fed.

Other News

Trending Now

Marilyn Manson and Charlie Hunnam are Besties
David Beckham and his son Brooklyn pose at the European premiere of "King Arthur: Legend of the Sword " in London May 11, 2017. Despite what you may have thought, this isn't actually the 42-year-old's film debut. "He was fantastic", Ritchie said.

Graco recalls car seats; webbing may not hold child in crash
The National Highway Safety Transportation Administration is warning parents about a safety issue involving Graco vehicle seats. Graco has said customers will be notified of the recall and dealers will provide consumers with a free replacement harness.

Davis homers twice in extra innings, Orioles edge Tigers
But an improvement from an offense that ranked 20th in runs scored during April, given the Orioles' lineup, was inevitable. He's a thumping right fielder with a great work ethic and a humble persona, a fan favorite who embraces the big moments.

IDF clashes with Palestinians at Gaza border and in West Bank
The hunger strike began last month in protest of what the prisoners claim are violations of their rights in Israeli jails. Numerous prisoners were convicted of terror attacks.

Billboard Music Awards: CĂ©line Dion gives 'Titanic' performance
Celine Dion performed her classic My Heart Will Go On , at the Billboard Music Awards 20 years after the song was a chart topper. Though " My Heart Will Go On " became a resounding success, that doesn't mean it is - or was - universally beloved.

US Admiral: North Korea's Actions 'Recipe For Disaster'
The two agree on the larger goal of a nuclear-free North, and both have said they are open to talks under the right conditions . North Korea has now carried out three failed and four successful rocket launches since the start of the Trump Administration.

Monaco lift Ligue 1 title after 17 yrs
After winning the Ligue 1 with AS Monaco, the winger told the French press, "I read the papers, but for now there is nothing concrete".

Theresa May and Jeremy Corbyn loom large in ITV leaders' debate
Mr Farron repeated his party's threat to hold another referendum on the final deal in a desperate bid to keep Britain in the EU. The leaders clashed over Brexit, migration, and social care during the live two-hour programme chaired by Julie Etchingham.

Macron Calls for EU Reforms, Vows to Work Closely with Germany
The French leader said that " deep reforms " are required for the European Union that " need common work " from Paris and Berlin. Back in Paris , Mr Macron spent yesterday selecting his Cabinet with new Prime Minister Edouard Philippe.

Tom Cruise confirms 'Top Gun' sequel is in the works
The 54-year-old actor says the long-discussed sequel to " Top Gun " is a sure thing and should start shooting soon. Rest assured, he wants everyone to know "it is definitely happening".