Federal Reserve officials are on track to start raising short-term interest rates later this year, even though long-term rates are going in the other direction amid new investor worries about weak global growth, falling oil prices and slowing consumer price inflation.
Highlights:
- At the Jan 27-28 FOMC, officials likely to repeat that they can ‘be patient’ on rates
- ‘Patient’ means no moves until June at the earliest
- Recent developments in the economy and markets could cause Fed to delay
- One worrying development for Fed officials is a drop in yields on 10-year Treasury notes below 2%
- The March FOMC will be critical but falling core inflation and bond yields could give the Fed caution
Despite the earlier headline saying the Fed wasn’t prepared to delay liftoff, there is nothing hawkish here.
