The next rate hike may happen sooner than it was expected, February Fed meeting minutes showed.
Federal Open Market Committee discussed the potential effects of tax cuts and easing regulators’ standards, as well as increasing costs, promised by the new administration.
This session was the first under President Trump.
“Members of the Committee expressed the view that it would be acceptable to raise rates in the near future, if the inflation and labor market performance meet expectations or even exceed them”, – the minutes state.
Employment growth has been solid, and consumer price inflation peaked in recent years.
Treasury bonds yield curve leveled off after minutes release, and 2-year yields rose, approaching 1.23%, while the 10-year slipped to 2.41%.
World oil reserves continue falling – Goldman
Goldman Sachs expects crude oil reserves in the world continue falling due to the reduction in output, in spite of the fact that they continue growing in the United States.
“We do not believe that the increase in the US oil output may interfere with our forecasts, while other global manufacturers show a tendency to decline”, – noted the bank’s analysts in a note to clients.
“Given our forecast on production growth by 1.5 million barrels a day for 2017, increasing of the level of basic demand compensates oil production growth in the United States”, – they continue.
Brent and WTI will rise to $ 59 and $ 57.50 per barrel in the second quarter before sinking to $ 57 and $ 55, respectively.
On Wednesday, crude oil was held near multi-week highs, and West Texas Intermediate of April delivery increased by 18 cents to $ 54.51 a barrel, while Brent – by 24 cents to $ 56.90.
Production growth in the US has pushed oil and gasoline supplies to record highs, limiting the prices that have started to grow after the agreement of OPEC and other countries to reduce production by 1.8 million barrels a day.
“While the decline in production has reached a historic high, 90%, recovery of drilling activity in the US exceeded expectations”, – emphasizes Goldman, adding that it was not due to the expectation of rising prices but due to an increase in financing and efficiency of offshore companies.