The US central bank may not raise interest rates before June as policymakers worry about economic headwinds stemming from external factors, minutes of the Fed’s March policy meeting suggest.
According to the minutes released on Wednesday, policymakers debated whether they might hike rates in April but “a number” of them argued that headwinds to growth would probably persist, Reuters reported.
Many members of the policy-making panel argued that they should be cautious about raising rates.
“Participants generally saw global economic and financial developments as continuing to pose risks,” according to the minutes.
Policymakers had signaled at the close of the March 15-16 meeting that they expected to raise rates twice in 2016 but the timing of the hikes still appears up in the air.
According to the minutes, many Fed members said they were concerned that the central bank had limited firepower to respond to shocks from abroad because interest rates are already so close to zero.
According to the minutes, several of the central bankers said elevated risks faced by the US economy meant that raising rates in April “would signal a sense of urgency they did not think appropriate.”
A small minority indicated a rate hike might be warranted when the Fed meets at the end of April. After that meeting, policymakers next convene June 14-15.
Fed chief Janet Yellen said at end-March that the central bank should “proceed cautiously” in raising rates, a view that has been recently embraced by policymakers including St. Louis Fed President James Bullard, Reuters noted.
Bullard said on Wednesday that economic data has been mixed since the March meeting, which could make it difficult for the Fed to raise rates this month.
The Fed left its target interest rate for overnight lending between banks at between 0.25 percent and 0.5 percent in March and in January after December’s hike which ended seven years of near-zero rates.
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