Fed Minutes Signal Patience on Rate Moves for 'Some Time'

US Dollar Steadies as May FOMC Minutes Detail

Why is the Fed being patient about interest rates?

Williams, who is vice-chairman and a permanent voting member of the Fed's rate-setting committee, also said some risks to global growth have receded and domestic drivers of the US economy are strong, likely putting growth above 2% and its long-run potential this year.

US trade tensions with China combined with other pressing global issues like Brexit have given committee members concern over whether global growth is sustainable.

That was despite Trump's repeated demand for a rate cut.

Risks to the US economic outlook, including trade uncertainty and Brexit, have receded but are still present, the US Federal Reserve said Wednesday.

Meanwhile, given "global economic and financial developments as well as muted inflation pressures, participants generally agreed that a patient approach" to deciding on the benchmark lending rate "remained appropriate".

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The May FOMC minutes detailed a reserved conversation among policymakers who believed that patience on rates would be appropriate for the foreseeable future.

But overall "it appears as though the Fed is exactly where they want to be and don't have to lean one way or the other", said Art Hogan, chief market strategist at National Securities in NY.

Consistent with Fed Chair Jerome Powell's press conference after the meeting, participants observed "at least part of the recent softness in inflation could be attributed to idiosyncratic factors". Earlier this year, during the FOMC's first meeting on May 1, Fed officials kept the rates unchanged. "A number of participants observed that some of the risks and uncertainties that had surrounded their outlooks earlier in the year had moderated, including those related to the global economic outlook, Brexit, and trade negotiations", the minutes said.

New York Fed President John Williams said at a press briefing that there is not now a strong argument for changing rates, including as a response to low inflation readings that may due to temporary factors.

The May Fed meeting minutes suggest that policymakers will be keeping interest rates at their current level for the foreseeable future.

The Federal Reserve wants the banking system flush with cash to keep the economy humming, but there may be bottlenecks that undermine the USA central bank's credibility to influence interest rates.

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