Any hopes of further US interest rate cuts have been dampened after the Federal Reserve admitted to heightened concerns surrounding rising inflation.
In the April 29-30 meeting of the Federal Open Market Committee, the Fed governors voted 8 to 2 to cut interest rates by 25 basis points to 2%.
However, Dallas Federal Reserve Bank president Richard Fisher and Philadelphia counterpart Charles Plosser voted against the action on the “worrisome development” surrounding inflation.
The news comes as the Fed cut its growth forecast for this year from the 1.3% to 2% predicted in February to between 0.3% and 1.2%.
“Although readings on core inflation have improved somewhat, energy and other commodity prices have increased, and some indicators of inflation expectations have risen in recent months,” the meeting minutes read.
“The committee expects inflation to moderate in coming quarters, reflecting a projected leveling-out of energy and other commodity prices and an easing of pressures on resource utilization.
“Still, uncertainty about the inflation outlook remains high. It will be necessary to continue to monitor inflation developments carefully.”IFAonline
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