The Federal Reserve should not overreact to Friday's weaker-than-expected U.S. GDP report, but needs to consider more data before contemplating another interest rate increase, a top Fed policymaker said.
Against this backdrop, the Committee decided to maintain the target range for the federal funds rate at 1/4 to 1/2%. The stance of monetary policy remains accommodative, thereby supporting further improvement in labor market conditions and a return to 2% inflation.
Federal Reserve Chair Janet Yellen said on Monday that interest rate hikes are likely on the way because "positive economic forces have outweighed the negative" for the United States now that risks from earlier this year have diminished.
Traders said oil prices rose on a sharp fall in the dollar on Friday after weak U.S. jobs data sparked concerns over the state of the world's biggest economy, cutting expectations of a near-term cut in U.S. interest rates.
Fundamental indicators rose in priority as the U.S. Federal Reserve had signalled in the Federal Open Market Committee meeting minutes that its members would consider a rate hike in June if the economy improved. The two indicators released on Friday depreciated the USD across the board. The U.S. non farm payrolls (NFP) recorded a two-year low at 36,000 jobs added in May.
Federal Reserve Chair Janet Yellen will likely keep the door open to an interest rate hike within the next few months when she speaks on Monday, while striking a balanced tone about recently disappointing jobs growth and mixed signals in the U.S. economy.