Fed's patience on interest rates to last 'for some time'

Federal Reserve unlikely to raise rates in 2019

In recent weeks markets have been increasingly positioning for the possibility of the Fed's next move being a rate cut.

Persistent low inflation is one of "many risks" to the U.S. economic outlook but that does not mean an interest rate cut is likely any time soon, a Federal Reserve official said Wednesday.

Even if economic conditions improve this year, members of the Federal Reserve agreed that they won't likely raise interest rates, according to minutes released Wednesday from the Federal Open Market Committee's two-day meeting that concluded earlier this month.

That was despite Trump's repeated demand for a rate cut.

The minutes showed the Fed delving deep into the mechanics of how they could best structure their holdings of several trillion dollars of securities to battle a future economic downturn.

"That said, these and other sources of uncertainty remained".

Central bankers remain baffled by the very low inflation rate, which they continue to attribute at least in part to "idiosyncratic factors", like low apparel prices.

Meanwhile, the USA economy should grow at a solid 2.25-2.50% rate this year, with inflation moving up to the Federal Reserve's target, putting rates in the right place, a top Fed official said on Wednesday.

'Members observed that a patient approach to determining future adjustments to the target range for the federal funds rate would likely remain appropriate for some time, especially in an environment of moderate economic growth, ' noted the minutes.

"Many participants" said they thought it might help for the Fed to gradually load up on short-term securities now, so that they could be traded for longer-term securities and bring down long-term rates as a way to better stimulate the economy if needed in the future.

The latest minutes of the US Federal Reserve's policy meeting show many participants took issue with President Donald Trump's call for an interest rate cut.

"A number of participants observed that some of the risks and uncertainties that had surrounded their outlooks earlier in the year had moderated, including those related to the global economic outlook, Brexit, and trade negotiations", the Fed minutes said.

San Francisco Federal Reserve President Mary Daly on the outlook for US economic growth, wage growth and the impact from the China tariff uncertainties.