EconomyWall Street reacts to Fed’s April minutes – Financial Times

The minutes of The Federal Reserve’s April policy-setting meeting showed that doubts about the strength of the US economy grew.

Even before the minutes were released, markets had come to expect that a rate rise in June looked doubtful, on the back of recent lacklustre economic data.

Here’s what economists took away from the latest Fed minutes.

Michael Hanson, economist at Bank of America, said:

Overall, FOMC participants maintained that risks still remain largely balanced but uncertainty was creeping up, which was reflected in some of the discussion in the minutes. Starting the hiking cycle the second half of the year still seems quite possible — provided the data support it. We continue to see a September hike as most likely, with risks skewed to later.

Tom Porcelli, economist at RBC Capital markets, said:

Here was nothing in the FOMC Minutes that wasn’t already “in the market” based both on the modest tweaks to the press statement in April and the recent round of Fed speeches. If it wasn’t already obvious, the prospects for a June hike waned even further.

Though there were some members that left the door open, it seems to be the strong consensus now that June is off the table. Our base case remains that growth will recover in Q2 and that this coupled with continued tightening in the labor market will be enough to usher in a September lift-off.

Blerina Uruçi, economist at Barclays, said:

Overall, we read the minutes as suggesting FOMC members view the outlook as broadly unchanged from March, and we continue to expect an initial rate hike at the September meeting.

Paul Ashworth, economist at Capital Economics, said:

There were one or two isolated signs of hawkishness in the minutes, which noted that core inflation may have firmed and that “larger wage gains were also reported in some regions”. On the other hand, a few participants wanted to add more monetary stimulus and were firmly against tightening policy in the near term. The upshot is that the Fed is still in wait-and-see mode.

Patrick Newport, economist at IHS Global Insight, said

The biggest news was that “many” participants thought a June date unlikely, but, hedging their bets, they “generally did not rule out this possibility.” We continue to expect a September rate hike, but could very well move that back to December, or even early 2016, if the expected improvement doesn’t materialize.