Interest Rate Concern
After their last meeting in December, at which the US Federal Reserve
voted to keep rates at 5.25 %, Fed has let the cat out the bag, by
insinuating that there could be a rise in interest rates, in order to keep
inflation at a respectable rate. It had been the fourth time that the
interest rate was voted to remain at 5.25%. Inflation is not the only
concern that the US Federal Reserve has, as they referred to the housing
market and the concern of the declining movement within this sector.
Analyst have speculated that the US Federal Reserve might be waiting to
ensure that they have a clear vision of the US economy and can confidently
anticipate any inflation risks that might appear in the future.
The minutes of the meeting indicated that certain members thought that
the downside risks to the economic growth was increasing and was more
broadly based then they had previously anticipated. All of the members,
however, did agree that the predominant concern was that inflation would not
The meeting also reflected that including inflation concerns, the economy
was indicating various conflicting information, which makes adjusting the
rates in either of the directions a possibility. Together with their rates
decision of last month, the US Federal Reserve released a statement that
they had left room for any further increases, in order to keep inflation in
check, if it was needed at any time.
The information collected by the US Federal Reserve has shown that
activity in the manufacturing sector has remained less than in the previous
years, that the previously active housing market sector has slowed down
remarkably, and that there is still a great concern in the consumer spending
sector, even though the end of the year had seen a little increase in
The minutes of the US Federal Reserve, have also indicated that after
eighteen rises, which were successive, that all the members of the US
Federal Reserve Committee with the exception of one member, voted for the
rates to remain the same for the fourth time.