The US Federal Reserve gave its clearest hint to date last night that it was close to ending its long-running programme of raising interest rates.
Minutes of its December meeting showed that views on its 11-strong committee varied on how much more tightening was ahead, with some saying the outlook was less certain. "Although future action would depend on the incoming data ... the outlook for policy was seen by most members as indicating that, given the information now in hand, the number of additional firming steps required probably would not be large," the minutes said.
Officials believed the language would suggest to financial markets that only a few more rates rises would be likely to follow, the minutes showed.
The dollar, which had already been undermined by unexpectedly weak manufacturing data, suffered its largest fall in three months. Against the euro, it fell 1.5 per cent, the biggest fall in three months, to break through the key $1.20 barrier. It also tumbled 1.4 per cent to 116.20 yen from 117.88.
Paul Ashworth, the US-based chief international economist for the UK consultancy Capital Economics, said: "The market has taken this as a sign that rates won't be going up so much further."
The Fed has raised rates 13 times over the past 18 months from their trough at 1 per cent three years ago to their current rate of 4.25 per cent. Yesterday's move had been widely expected since 13 December, when it abandoned its long-held description of current monetary policy conditions as "accommodative". Minutes of the November meeting showed members discussed the need to change their outlook for the benchmark rate "before long".Reuse content