-FOMC minutes
The Fed sounded unexpectedly dovish, saying that interest rates will be kept unchanged at historic low levels for longer amid concerns over low inflation and fears of derailing the US economic recovery. Policy makers did not hint on a timing of first interest rate hike since the 2008 financial crisis, but highlighted that there was more risk in lifting rates earlier than expected rather than later. However, several policy makers noted that waiting too long to hike rates could lead to "undesirably high inflation." Meanwhile, US producer prices fell the most in five years in January amid plunging energy costs, suggesting the nation's inflation will remain benign in the near term. The Labor Department reported that its producer price index for final demand dropped 0.8%, the biggest decline since November 2009, after falling 0.2% in December. It was the third consecutive month of decline in PPI. The decrease was triggered by a 10.3% plunge in energy that was also the biggest since the records began. Other reports pointed to a moderate growth of the world's number one economy early in the first quarter. Housing starts dropped 2% to 1.07 million annual rate, as ground breaking for single-family projects fell from a 6-year peak. The number of building permits also fell unexpectedly in January. According to the Commerce Department, the number of building permits granted last month dropped by 0.7% to a seasonally adjusted 1.053 million units, down from 1.060 million in December.
© Dukascopy Bank SA