Dive Brief:
- The U.S. Federal Reserve's minutes, released Wednesday afternoon, revealed many officials at its April policy meeting said June — the initial projected month — was too early to raise interest rates.
- As many experts predicted, officials expressed concern that disappointing market data from the month cautioned them from rushing to increase rates.
- On an optimistic note, the April minutes also included commentary from officials who believe the U.S. economy will gain momentum in the coming months after a slow first quarter.
Dive Insight:
The Fed is considering its first interest rate hike in almost seven years, which could lead to higher mortgage rates. Fed Chair Janet Yellen has said she hopes to get rates back to normal levels, which would be between an estimated 3.5% and 4%.
After the release of the minutes, analysts now forecast the increase to occur this fall or in January 2016.
Weak economic reports, with the exception of a surge in April housing starts, have created doubts about the stability of the U.S. economy. Last month, the Commerce Department reported a meager 0.2% improvement in the economy, while retail sales and industrial sales failed to meet expectations, The Wall Street Journal reports.
The strengthening U.S. dollar is also a factor hitting pause on the Fed's increase plans, as a rate hike could further raise the value of the dollar against foreign currencies, resulting in higher prices for American goods for global buyers, as well as decreasing profits for U.S. companies who deal internationally.
Housing experts have predicted that a looming interest rate hike would be a catalyst for the housing market this spring as potential buyers hurriedly enter the market to secure the current lower mortgage rates. That rush of purchasers, however, has not yet fully materialized, as mortgage applications fell for the past two weeks.
