Latest Global Business News

US Fed uncertain about pace of rate hikes: minutes

 
Minutes from the U.S. Federal Reserve's December meeting show... most policymakers believe President-elect Donald Trump's proposed fiscal policies.... could pose inflation risks.
 
This means the Fed might be raising interest rates at a faster-than-expected pace.
 
Kim Min-ji has the details. It looks like the U.S. Federal Reserve is keeping close tabs on the potential effects of fiscal policy on economic growth under the incoming Donald Trump administration.
 
Although there's no direct mention of the President-elect in the December minutes from the FOMC,... released Wednesday,... it does say that participants expressed "considerable uncertainty" about the timing, size and composition of any future fiscal stimulus or policy initiatives.
 
Almost all participants agreed that the upside risks to projections for economic growth had risen,... fueled by the potential for further expansionary fiscal policies in the coming years.
 
They also seemed to agree that this could bring about higher inflation,... meaning the Fed could raise rates at a faster pace than anticipated.
 
The U.S. central bank pushed up interest rates last month by a quarter point -- marking the first rate hike since December 2015 -- when officials lifted rates from near zero for the first time in nearly a decade.
 
usfed ratehike uncertain
 
With that, it gives Korea's central bank less room to maneuver its rate policy.
 
Its upcoming rate-setting meeting is scheduled for next week. "Now that the Fed is on the path of increasing rates... about two or three times this year,... Korea isn't in a position to lower rates, despite the slowing economy. Should Korea go in the opposite direction of the U.S., it could trigger capital outflow. Besides, Korea's growing household debt also limits the amount of room the central bank has to move."
 
It's widely expected the Bank of Korea will take a wait-and-see approach and hold the key rate at the record low of one-and-a-quarter percent for the time being.
 

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