USA studies an increase on rates sooner than expected

The Federal Reserve (Fed) discussed the possibility of a “faster than expected” monetary stimulus, including raising interest rates if economic improvement in US consolidated output, according to the minutes of the last meeting late July, released today.

“Many of the participants remarked that if the convergence towards the objectives of the Committee (Federal Open Market) occurs faster than expected, it may be appropriate to initiate the withdrawal of monetary stimulus earlier than previously anticipated,” the document states.

At the meeting, the Fed decided to continue with its progressive reduction billionaire bond purchase program by 10,000 million, putting it at 25,000 million dollars a month, while agreed to keep benchmark interest rates at exceptionally low levels , between 0% and 0.25%.

The central bank has a dual mandate to control price stability and promoting full employment.

Given inflation seems under control, the Fed President Janet Yellen pointed out as a concern the weakness that still shows the labor market.

However, records reveal that members of the Reserve contemplate future improvements in this regard, to close in July the unemployment rate at 6.2%, compared with 7.3% a year ago.

“Many of the members said that the characterization of underutilization of the labor market might have to change soon, especially if progress in the labor market continues to be faster than expected,” the document added.

The Fed has indicated it expects to complete the program liquidity at its meeting in October, but has avoided concrete to give a possible rise in interest date.

Experts believe that will occur sometime in mid-2015, though they seem saw suggestions for this rise, which would be the first since 2008.

Precisely this question is the main uncertainty in the financial markets, it would mean the beginning of the end of cheap money.

All these issues were discussed at the meeting of central banks US organized by the Federal Reserve Bank of Kansas City, to be held from Thursday to Saturday morning and where Yellen offered a press conference on Friday.

Besides Yellen will also attend President of the European Central Bank (ECB), Mario Draghi, and the governor of the Bank of Japan, Haruhiko Kuroda.

The next Fed meeting to review the monetary policy of the USA is planned for mid-September, and after her Yellen offered a press conference.