NEW YORK: The dollar rose against the euro on Wednesday (Apr 8) after the minutes of the Federal Reserve’s last policy meeting showed a split over the timing of an interest rate increase.
According to the minutes of the Mar 17-18 meeting of the Federal Open Market Committee, “several participants” thought conditions were right for a June hike in the federal funds rate, stuck near zero since late 2008.
Others deemed the economy would not be able to weather a hike until later in the year, while “a couple” said liftoff would remain unlikely until 2016.
“After the FOMC meeting, people were convinced that the June rate hike was off the table, and the bottom line is between now and then,” said David Solin of Foreign Exchange Analytics. But the foreign exchange market “had jumped the gun by thinking that a June hike was off the table,” he said.
The dollar strengthened against the euro, pushing it down to US$ 1.0780 from US$ 1.0811 late Tuesday.
Omer Esiner, chief market analyst at Commonwealth Foreign Exchange, said that the minutes had “a somewhat more hawkish tone than many were expecting, especially given the extent to which the Fed cut its forward guidance on growth and inflation at its March meeting.”