But as the months went by, persistent softness in the US economy, with macroeconomic data printing some horrid numbers, has diminished hopes the Central Bank will act that soon.
On its latest March meeting the Central Bank decided to remove the world "patient" as scheduled, but at the same time added that "an increase in the target range for the federal funds rate remains unlikely at the April FOMC meeting," and that "just because we removed the word 'patient' does not mean we will become impatient." Furthermore and in a subtle way, officers were not that optimistic about growth, and expressed concerns about a strong dollar, by stating that "economic growth has moderated somewhat” and “export growth has weakened.”
FED's officers rhetoric over the last month decreased from hawkish by the end of March, to clearly dovish during the last couple of weeks. Atlanta Federal Reserve President Dennis Lockhart surprised with a hawkish stance late March when he said he would increase interest rates midyear, but finally recon Q1 data was "notably weak" returning to its usual dovish stance.
Inflation in the US has shown some signs of life, as the latest readings show that core CPI climbed 0.2% in March, nudging the annual rate to 1.8% from 1.7% in February, but employment figures have been quite a disappointment with March's job creation at 126K far worse than the average 250K of the previous month. The Central Bank may still raise rates in June, but it has made it clear that a rate hike is data dependant, with inflation and employment being the keys. Should inflation and employment readings disappoint after this meeting, September will be a more likely bet for a move.
That a rate hike is the next FED's move, is out of the question. The problem is when is the FED going to do it. According to the Minutes of the FED's March meeting, several policymakers said that the Central Bank should raise its benchmark interest rate in June, although others wanted the move to take place "later in the year."
So far, the range time for a rate hike has been therefore set in between June and September. Considering the slower economic growth seen during the first quarter of this 2015 investors are weighing the latest, as the most probable date for a move.
For the most, expectations are of a no change in the economic policy this time, and there is no scheduled press conference for after the meeting. A press conference will only take place if the Central Bank decides to hike rates by surprise, something quite unlikely at the time being.
Investors are eager to know when the Federal Reserve will act, but the most probable scenario is that they won't get much clues this week. Attention will shift then towards the Minutes to be released later in the May and any change in the wording of the statement.
Follow us on Telegram
Stay updated of all the news
EUR/USD stays below 1.0700 as USD gathers strength
EUR/USD continues to trade in negative territory below 1.0700 on Wednesday. Higher-than-expected increase in US JOLTS Job Openings for April provides a boost to the US Dollar and weighs on the pair as investors keep a close eye on US debt-limit news.
GBP/USD struggles to recover above 1.2400
GBP/USD has lost its traction and declined below 1.2400 after having climbed above that level earlier in the day. The pair struggles to gather recovery momentum as the US Dollar holds its ground after strong employment data. Markets await House vote on debt-limit bill.
Gold extends daily rebound beyond $1,970
Gold price has gained traction and advanced above $1,970 in the second half of the day on Wednesday. The benchmark 10-year US Treasury bond yield stays in negative territory and allows XAU/USD to keep its footing. Market mood remains cautious ahead of the debt-ceiling vote.
Ethereum holders pull $1 billion in ETH off exchanges hinting retail-led rally
Ethereum holdings in exchange wallets declined by $1.04 billion between May 8 and May 31. Interestingly, while large wallet investors have shed their Ether holdings, the altcoin got redistributed to addresses with less than 1 ETH.
C3.ai Stock News: After 33% rally, AI shares backtrack ahead of earnings
C3.ai (AI) stock slipped 7.6% to $41.62 in Wednesday’s premarket ahead of quarterly earnings expected after the close. This may just be traders taking profits after Tuesday’s 33.4% surge in the AI stock price.