Federal Reserve policymakers decided in June that interest rate hikes should stay on hold until they have a handle on the consequences of Britain's vote on EU membership, according to the minutes of the Fed's June policy meeting released on Wednesday.
The minutes of the June 14-15 meeting, which took place ahead of the June 23 referendum in which Britons voted to leave the European Union, showed widespread unease over the so-called "Brexit" vote, including among voting members on the rate-setting Federal Open Market Committee.
The dollar, which has gained more than two percent against a basket of currencies since the Brexit vote and could weigh on U.S. exporters, weakened slightly following publication of the minutes.
Still, in the minutes of the June meeting, many Fed policymakers who participated in the policy discussion stressed the sharpness of the hiring slowdown could be statistical noise, and most argued the economy would be ready for rate increases unless a financial or economic shock knocks America off course, according to the minutes.
Federal Reserve Governor Daniel Tarullo on Wednesday said there is no need to raise U.S. interest rates until there is convincing evidence inflation is moving towards the Fed's target on a sustained basis.
Tarullo, who as a governor has a vote at every Fed policy meeting, said the cautious approach was particularly warranted as the world digests the impact of Britain's vote to leave the European Union.
"I want to be more convinced that the underlying rate of inflation is around 2 percent," Tarullo said at a Wall Street Journal event in Washington.
U.S. inflation outside of food and energy has edged higher since late 2015 but Tarullo said recent inflation movements were "not enough to convince me that the rate is heading in a non-transitory way to 2 percent."
Good news from the US: the services sector is on the move. the ISM Non-Manufacturing PMI jumps to 56.5 points, showing solid growth rather than mediocre growth. The employment component advanced from 49.7 to 52.7 points – rise from slight contraction into growth area. This is a good sign for the jobs report. This rebound could imply a rebound in jobs, so needed after May’s terrible report.
Oil prices rose almost 2 percent on Wednesday as robust U.S. economic data lifted crude futures from two days of declines, although a gasoline glut and woes from Britain's European Union exit suggested more pressure ahead.
Oil prices also rose in anticipation that the U.S. government will report on Thursday a seventh straight weekly drop in crude stockpiles. A Reuters poll estimated a drop in crude inventories of 2.3 million barrels for the week ended July 1.
The American Petroleum Institute (API) will issue its own report on domestic oil stockpiles at 4:30 p.m. EDT (2030 GMT), before Thursday's official data.
Brent crude settled up 84 cents, or 1.8 percent, at $48.80 a barrel. U.S. crude futures gained 83 cents, or 1.8 percent, to settle at $47.43.
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