-Federal Reserve
While the Fed pointed out that the US economy was growing at a sustainable pace with solid job gains and lower unemployment rate, the central bank said that it would maintain short-term interest rates at record low at least until mid-year. In addition to labour, inflation and financial data, policy makers also highlighted that they would take into consideration international developments when thinking about the timing of the first interest rates hike, adding a reference to global markets for the first time in two years. An increasing number of economists expect that the date of the first rate lift could slip to September or even later. Many Fed officials have pointed to a possible rate increase around mid-year, but they also left the door open to a later move. The Fed has kept its benchmark rate near zero since 2008 to boost borrowing, spending and investment and fuel the recovery following the Great Recession.
The Fed's stance sharply contrasts to many central banks in developed countries that have recently eased monetary policy to support faltering economies, being led by the European Central Bank's 1 trillion euro quantitative easing programme to prop up the Euro zone's economy. The policy divergence has pushed the US Dollar to multi-year peaks, a looming concern on the US central bank's radar as the move tends to have a negative effect on US exporters and inflation.
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