Fed’s minutes play down fear over rate rises

 
Julian Harris
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SENIOR officials at the US Federal Reserve have eased the concerns of investors over its future monetary policy, with last night’s minutes of its March meeting helping to boost shares across the pond.

The minutes revealed that Fed officials had worried that traders might overreact to mapped forecasts that suggested interest rates could be 2.25 per cent by the end of 2016.

Yet the projections appear to over-state the extent to which its rate-setting members expect policy to be tightened.

President of the Chicago Federal Reserve Bank, Charles Evans, had earlier in the day dismissed the so-called dot charts. “A lot of the differences of opinion that we have are on full display in those dot charts,” he said.

Meanwhile yesterday, the IMF’s financial stability boss Jose Vinals said that the Fed’s tapering of its monthly asset purchases is going well. “I call this smooth exit a goldilocks exit. Neither too hot, nor too cold, just right,” Vinals said.

However, the IMF’s latest report on financial stability, released yesterday, stressed the need to move from liquidity-driven economies, with loose and unconventional monetary policies, to more solid growth-driven performance. It added that financial markets needed to be ready for a more normal growth and interest rate environment.