The Federal Reserve appears unlikely to raise interest rates before June amid widespread concern at the U.S. central bank over its limited ability to counter the blow of a global economic slowdown, minutes from the Fed’s March 15-16 policy meeting suggest.
The minutes released on Wednesday showed policymakers debated whether they might hike rates in April but “a number” of them argued headwinds to growth would probably persist, with many arguing they should be cautious about raising rates.
“Participants generally saw global economic and financial developments as continuing to pose risks,” according to the minutes.
Policymakers had signaled at the close of the March meeting that they expected to raise rates twice in 2016 but the timing of the hikes still appears up in the air.
According to the minutes, many Fed members said they were concerned that the central bank had limited firepower to respond to shocks from abroad because interest rates are already so close to zero.
“Many participants indicated that the heightened global risks and the asymmetric ability of monetary policy to respond to them warranted caution,” the minutes stated.
Investors have held doubts the Fed would raise rates at all this year and the minutes did little to shift bets on the path of policy.
Prices for fed futures contracts suggested investors still saw the chance of a rate hike in December as just better than even, and they saw virtually no chance of an increase at the April 26-27 policy meeting, according to the CME group.
“Resistance to near-term action is still quite entrenched,” said Ian Shepherdson, an economist at Pantheon Macroeconomics.
According to the minutes, several of the central bankers said elevated risks faced by the U.S. economy meant that raising rates in April “would signal a sense of urgency they did not think appropriate.”
A small minority indicated a rate hike might be warranted when the Fed meets at the end of April. After that meeting, policymakers next convene June 14-15.