- An interest rate increase is hanging in the air but no one seems to find enough reasons to pull the trigger.
- The FOMC expects inflation to be at 2% and interest rates at 2.6% by 2018.
- Holders of long-term bonds might rethink their positions as interest rate increases could have severe negative repercussions on bond prices.
On May 18 the FED released the minutes of the Federal Open Market Committee (FOMC) meeting held in April. The FOMC decided not to increase interest rates in April which gave a short relief to the markets, but an analysis of the FOMC meeting minutes reveals interesting things because it gives indications on the way of thinking FOMC participants have and hints on potential future interest rate increases. While the goal of the FED is to maintain financial stability and increase the resilience of the financial system to shocks, for an investor it is important to look at the economic trends related to the FOMC’s decisions in order to better assess the risks of their portfolio. More →