The new Chairman of the Fed Reserve, Jerome Powell officiated the interest rate hike in March whereas, monetary policymakers had voted unanimously to increase the bank rate to 150 to 175 basis points coupled with some signals for further tightening in the future. The minutes of meeting was released on Wednesday which could also show how to deal with the two major unrecognized prospect of the Fed, such as the amount of growth from the tax overhaul bill and the impact of the trade war. As Robert Kaplan, Dallas Fed President stated that the continuous trade fight between the two biggest economies in the world could lead to a “chilling effect” on the economy. On the other hand, Fed Chair Powell told that it was too soon to conclude the possible effect of the thickening border between the United States and China. Moreover, the elected New York Fed President John Williams mentioned that the proposed actions so far do not have a significant impact on the economy. While the dot plot for the month of March indicates a decently stronger pace of contraction from the Federal Reserve for 2019 and 2020, as the American economic growth gained higher than initial estimate and the jobless rate was reduced to 3.6 percent. Such optimistic outlook is viewed that the tax reduction would likely reinforce aggregate demand. Still, Fed officials cannot foresee a stronger growth and above-trend employment level with an attempt to move in a major increase in price pressures in the near-term. The annual core PCE inflation is predicted to gain 1.9 percent by the end of 2018. Investors are also studying the minutes to see if there are clues about strike price due to “Powell put” for U.S stocks despite refreshed market volatility.
