- Shoji Tonouchi, senior fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities
Policy makers of the Federal Open Market Committee saw growing uncertainty over the outlook for inflation and growth, according to minutes of the January meeting, when the key lending rate was kept unchanged. US rate setters left the target range for federal funds rate on hold at 0.25% to 0.5%, after lifting it from near-zero in December. Many analysts are predicting further increases this year. While most of policy makers stuck to the expectation of 2% inflation over the medium-term, a number of members "viewed the outlook for inflation as somewhat more uncertain or saw the risks as being to the downside". However, the available data were not sufficient to assess the balance of risks to the economic outlook. Given the elevated risks, both external and domestic, some members wanted to see an evidence of inflation moving back to the 2% target before they were willing to consider further rate increases.
Meanwhile, US industrial production rose for the first time since July in January. America's industrial output increased 0.9% on month in January, up from a downwardly revised 0.7% decline in December. Capacity utilization, a measure of slack in the industrial sector, meanwhile, rose to 77.1% in the reported month, following the downwardly revised 76.4% in December.
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