Fed ‘minutes’ boost USD

For a few weeks, currency traders and economists, alike, waited with baited breath for America’s Federal Reserve Bank to release the ‘minutes’ from its most recent meeting. Upon their release, USD bulls responded with joy, as the minutes seemed to suggest that multiple rake hikes will ensue. Previously, many economists had expected the Fed to raise interest rates only one more time as part of the current cycle of tightening. The latest forecasts, however, indicate that an almost certain rate hike in March will be reinforced by further rate hikes in the following months. In short, it looks like the interest rate differential between the US and the rest of the world will continue to widen. Reuters reports:

New Fed Chairman Ben Bernanke has commented extensively on monetary policy, indicating that the Fed would be vigilant in holding down inflation expectations.

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