US economic growth slowed to just 0.2% in the first quarter (1Q) of 2015, down from 2.2% in 4Q2014, but on the other hand we know that relatively weak starts into the year have become a tradition, suggesting that statistical problems of correctly adjusting for the seasonal variations of the economy might play a role to a great extent along with other temporary dampening factors like the harsh winter and strike by port workers.
As such, it is no surprise to note the Fed acknowledging the recent weak data but is not as moved by that as many observers might have expected. It reiterated that it will be appropriate to hike rates “when it has seen further improvement in the labour market and is reasonably confident that inflation will move back to its 2% objective over the medium term”.
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