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| Version 2 | Version 3 |
|---|---|
| US rate rise conditions 'approaching', Fed minutes show | US rate rise conditions 'approaching', Fed minutes show |
| (about 1 hour later) | |
| Federal Reserve policymakers thought conditions for a US rate rise "were approaching" when they met last month, but that the economy was not ready yet. | Federal Reserve policymakers thought conditions for a US rate rise "were approaching" when they met last month, but that the economy was not ready yet. |
| Minutes from the Fed's meeting on 28-29 July show one policymaker was ready to vote for a rate rise at the meeting. | Minutes from the Fed's meeting on 28-29 July show one policymaker was ready to vote for a rate rise at the meeting. |
| However, other policymakers remained concerned that inflation would remain weak because of the strong dollar and falling commodity prices. | However, other policymakers remained concerned that inflation would remain weak because of the strong dollar and falling commodity prices. |
| The Fed's key interest rate has been kept near zero since December 2008. | The Fed's key interest rate has been kept near zero since December 2008. |
| There has been speculation that the Fed will raise rates at its meeting in September, and last month Fed chair Janet Yellen said she thought a rate rise this year was likely. | There has been speculation that the Fed will raise rates at its meeting in September, and last month Fed chair Janet Yellen said she thought a rate rise this year was likely. |
| Inflation focus | Inflation focus |
| In assessing the strength of the US economy, the Fed has been keeping an eye on the US jobs market - which has seen the unemployment rate fall to 5.3% - and on inflation, which is still below the Fed's target of 2%. | |
| The minutes from the Federal Open Market Committee's (FOMC) July meeting said: "Most judged that the conditions for policy firming had not yet been achieved, but they noted that conditions were approaching that point." | The minutes from the Federal Open Market Committee's (FOMC) July meeting said: "Most judged that the conditions for policy firming had not yet been achieved, but they noted that conditions were approaching that point." |
| The committee noted that the labour market "had continued to improve, with solid job gains and declining unemployment". | The committee noted that the labour market "had continued to improve, with solid job gains and declining unemployment". |
| However, when assessing inflation, it said that "some members continued to see downside risks to inflation from the possibility of further dollar appreciation and declines in commodity prices". | However, when assessing inflation, it said that "some members continued to see downside risks to inflation from the possibility of further dollar appreciation and declines in commodity prices". |
| The FOMC said it would continue to monitor inflation "closely, with almost all members indicating that they would need to see more evidence that economic growth was sufficiently strong and labour market conditions had firmed enough for them to feel reasonably confident that inflation would return to the committee's longer-run objective over the medium term". | The FOMC said it would continue to monitor inflation "closely, with almost all members indicating that they would need to see more evidence that economic growth was sufficiently strong and labour market conditions had firmed enough for them to feel reasonably confident that inflation would return to the committee's longer-run objective over the medium term". |
| Inflation figures released earlier on Wednesday showed that consumer prices rose by 0.1% in July, and were 0.2% higher from a year ago. | Inflation figures released earlier on Wednesday showed that consumer prices rose by 0.1% in July, and were 0.2% higher from a year ago. |
| So-called core inflation, which ignores changes in food and energy prices, also rose 0.1% last month, but was up 1.8% over the year. | So-called core inflation, which ignores changes in food and energy prices, also rose 0.1% last month, but was up 1.8% over the year. |
| Market reaction | Market reaction |
| The committee also cited China as a potential problem, saying that a "material slowdown" in the Chinese economy could affect the US economic outlook. | The committee also cited China as a potential problem, saying that a "material slowdown" in the Chinese economy could affect the US economic outlook. |
| The FOMC's meeting came before last week's action by China to weaken its currency. | The FOMC's meeting came before last week's action by China to weaken its currency. |
| Following the release of the Fed's minutes, US stocks rallied briefly but then fell back, while the dollar weakened on the currency markets. | Following the release of the Fed's minutes, US stocks rallied briefly but then fell back, while the dollar weakened on the currency markets. |
| "The Fed minutes don't rule out a September rate hike but they are certainly saying they want more evidence on the data," Peter Cardillo, chief market economist at Rockwell Global Capital, told Reuters. | "The Fed minutes don't rule out a September rate hike but they are certainly saying they want more evidence on the data," Peter Cardillo, chief market economist at Rockwell Global Capital, told Reuters. |