– This is the script of CNBC's news report for China's CCTV on May 25, Thursday.
Welcome to CNBC Business Daily, I'm Qian Chen.
According to minutes released Wednesday from the Federal Open Market Committee meeting earlier this month, officials agreed that they should hold off on raising interest rates until they knew a recent U.S. economic slowdown was temporary.
According to CME Group's FedWatch program, markets now see a 78.5 percent chance of a rate hike in June, a tad lower than the previous probability prediction.
Meanwhile, following the Fed minutes' release, traders scaled back bets on two more rate hikes by the end of 2017.
Federal funds futures also implied traders saw about a 46 percent chance the U.S. central bank would raise rates twice more by year-end, down from roughly 50 percent late on Tuesday.
[HUGH JOHNSON, Hugh Johnson Advisors LLC Chairman and Chief Investment Officer] "This is pretty much expected. Both of those (fed's rate policy and reducing balance sheet) are expected. And of course we expect the Feds probably gonna raise interest rates not just in June, but they are probably gonna raise interest rates at least one more time this year, and maybe 3 times next year. The Fed desperately, maybe that's too strong a word, wants to normalize conditions and that normalization means they want interest rates at higher level, and they want to reduce the size of their balance sheet. I think that's pretty much in the cards, I think everybody's expecting it, I think it's in the market."
Meanwhile, the central bank sees a system where it will announce cap limits on how much it will allow to roll off each month without reinvesting. Any amount it receives in repayments that exceeds the cap limit will be reinvested.
Caps will be set at low levels initially then gradually raised every three months, according to the meeting summary.
The process is similar to the tapering it did of the monthly bond-buying program known as quantitative easing. In that case, the Fed announced a gradual reduction in the amount of bonds it would be buying each month. In this case, it will be announcing the level of those bonds it will allow to roll off.
Regarding to the future outlook of the US economy, Fed officials said planned spending by President Donald Trump's administration could boost the economy more than currently forecast, although the details and timing of the projects "remain highly uncertain."
But some appeared to be more concerned about a potential slowdown in the job market and more pressure on the inflation front.
[BILL SMITH, Blaine Capital President and Chief Investment Officer] "The sentiment is very very positive. Many of these people are saying for the first time in 8 years that they haven't had a target on their back. Having said that its not converting into hard data yet. So we are still seeing weak GDP growth, we are still seeing weak retail sales. So we got to get that on the same page. How do you do that, you need to get this big fiscal stuff in Washington through, you got to get the tax cut done, you got to get the infrastructure bill done, and you know, thats dragging out right now."
On the market front, while the yield curve flattened, Wall Street remained slightly higher and the dollar slipped after the Fed minutes.
Gold prices bounced back due to the weakness of the greenback.
CNBC's Qian Chen, reporting from Singapore.