- Brian Jacobsen, chief portfolio strategist at Wells Fargo Advantage Funds in Menomonee Falls
The U.S. Dollar declined further against the Euro Wednesday following the release of minutes from the Fed's meeting in March. The shared currency gained to $1.3856 up from $1.3797, reaching the highest level since March 18.
According to the minutes, the Fed officials are concerned over low inflation rate in the U.S., as they had predicted that a strengthening U.S. economy would boost inflation from 1% towards the healthy 2% target, associated with a robust business activity. However, the harsh winter weather undermined their expectations, as it dampened economic growth in the world's number one economy. Also, central bankers appeared to be concerned that the market could potentially overreact to the upward shift in the Fed's expectations for short-term rates, and remained cautious about raising interest rates, with no specific schedule on plans to hike them as the nation's economy improves. In addition, they agreed that the existing 6.5% unemployment target has become outdated and ineffective gauge to determine the timing of the first rate hike. Consequently, the officials voted to replace a specific focus on a goal of the jobless rate with a longer list of less specific objectives. In general, the majority officials on the FOMC were increasingly optimistic about the economic growth, perceiving the recent weakness as a result of bad weather only.
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