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Next interest rate increase could come fairly soon

U.S. policy makers also stated that they have time raising interest rates as there is little concern about suddenly accelerating inflation. "T$3 he downward pressure on longer-term interest rates exerted by the Federal Reserve's asset holdings was expected to diminish in the years ahead in light of an anticipated gradual reduction in the size and duration of the Federal Reserve's balance sheet", the minutes said. With certain inflation expectation measures undershooting targets, and Donald Trump's fiscal stimulus plans remaining foggy; time may be needed for the Fed's "outlook to clear".

The Fed's rate-setting policy committee voted unanimously at the recent meeting to hold rates steady.

Behind closed doors, however, officials were laying the groundwork for raising short-term borrowing costs, the Journal noted.

The financial markets are forecasting about a 22 percent chance even though the Fed in December forecast three moves could be on the way in 2017. This may suggest that the market took the outcome of today's minutes to mean an unlikely March hike from the Fed was a lower probability than the skeptical had afforded.

Their willingness to move partly reflects a firming economy, particularly in the weeks since the February statement.

Check out the full minutes release here. The pound also dropped 0.1 per cent to US$1.2438.

The financial markets world over are now eagerly waiting for the minutes of the meeting of Fed held on January 31-Feb. 1.

Officials will see new inflation and employment data before that meeting.

Most economists have been forecasting a rise in June.

They stressed the importance of disabusing investors of their faith in a permanently dovish Fed, by "communicating that policy will respond to the evolving economic outlook".

The FOMC raised the key federal funds in December rate for only the second time in a decade.

The offshore yuan was also weaker in Hong Kong, falling 0.1 per cent to 6.8648 per U.S. dollar, compared with 6.8573 in the prior session.

Investors are, of course, counting on the fact that they'll enjoy the best of both worlds, with the Trump administration boosting growth and cutting taxes, while the Fed continues to cautiously nudge short-term interest rates higher.

Other risks to the economy includes the continued appreciation of USA dollar, they said.

Other officials, however, have shown more willingness to begin that conversation.

"The market these days listens less to Fed words and is more interested in Fed action", Borthwick said.

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