At the end of its monetary policy meeting last week, the Federal Reserve gave its first warning that it is going to start hiking interest rates – sometime.
Living up to expectations, the Fed Open Market Committee dropped the word “patient” from its post-meeting statement, an indication, subtle as it may be, that the era of zero interest rates is about to come to an end.
However, the Fed downgraded its views on the economy, inflation and lowered its interest rate trajectory, suggesting that interest rates would not rise soon.
“Just because we removed the word ‘patient’ does not mean we will become impatient,” Fed chairwoman Janet Yellen said at a post-meeting news conference.
In the UK, in the three months to January, the unemployment rate remained at its lowest level in over six years.
Figures based on the International Labour Organisation statistical methods show that the UK jobless rate was 5.7 per cent during this period, the same rate as in the October to December period, the Office for National Statistics said last week.
Elsewhere, Bank of England policymakers observed in their March meeting that the strength in the sterling raises the risk of a prolonged period of low inflation. The rate-setting committee unanimously decided to keep the bank’s monetary policy unchanged.
The number of US houses that started being built in February plummeted to its lowest level in a year, most likely due to the severe weather that kept building employees at home.
The report said housing starts dropped by 17.0 per cent to an annual rate of 897,000 in February from the revised January estimate of 1.081 million.
This is the latest indication that the economy hit a soft patch in the first quarter. Bad weather, a strong dollar, weaker overseas growth and a now-resolved labour dispute at West Coast ports have constrained economic activity in recent months.
On the other hand, the Commerce Department said building permits, an indicator of future housing demand, climbed 3.0 per cent to an annual rate of 1.092 million in February from the revised January rate of 1.060 million.
This report was compiled by Bank of Valletta for general information purposes only.