The minutes of the July US Federal
Open Market Committee released yesterday show, at bottom, that the members are
still in a wait-and-see mode with regard to the decision
to start raising core interest rates.
Inflation is still the worry and the
continuing collapse of oil prices must be adding to this state of affairs. The
latest US Consumer Price Index figure, also released yesterday, showed, as
expected, no change on the previous reading.
Bloomberg
SNAFU causes disruption in thin market
Bloomberg, and all other economic
news agencies, such as Reuters, are sent releases like the Fed minutes early but
are subject to an embargo until the appointed time for publication. It now
appears that someone in Bloomberg accidently put up a headline ahead of time on
their website which read:
“Fed Officials in July Saw Rate Rise
Conditions Approaching”.
Market watchers read this as meaning
that interest rate rises were imminent, and bid up the US dollar as a result.
When, nearly a half-an-hour later, the full story
appeared, it was obvious that the headline was, at the very least, out of
context. The eventual posting on Bloomberg says:
“Federal
Reserve officials said last month that while conditions for raising interest
rates were approaching, they need more confidence inflation is moving toward
their goal, according to meeting minutes that prompted investors to reduce bets
for a September liftoff.
Most meeting participants “judged that the conditions for
policy firming had not yet been achieved, but they noted that conditions were
approaching that point,” according to minutes of the July 28-29 Federal Open
Market Committee session, released Wednesday in Washington .
A headline on the minutes was inadvertently released by
Bloomberg 24 minutes before a 2 p.m. embargo set by the Fed.”
This
tells a considerably less hawkish story than the early headline would suggest,
and the dollar promptly went into reverse.
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