Fed Members Downgrade Economic Outlook for the U.S.

One of the hopes for the economy has been that the Fed will have reason to hike rates by the end of the year. However, with the release of the latest Fed minutes, it appears that this is an unlikely scenario. More than half of the FOMC members have a dour outlook for the rest of this year.

GFT's Kathy Lien reports in FX360 on the latest interest rate developments:

Any hope of a rate hike this year has been dashed by today's release as the prospect of weaker growth and inflation keeps the central bank on hold.  If it was possible to lower interest rates to negative levels, the Fed probably would but since that is not an option, the best they will do is keep rates steady for the rest of the year and discuss the possibility of easing monetary policy further.

With a shift toward a focus on fundamentals, this news is not boding well for the U.S. dollar. The outlook in Europe is considerably better than it was a few months ago, and that is helping the euro in forex trading. The U.S. dollar is becoming weaker, and it appears that it will be some time before interest rates can bolster the situation.