Many Fed members favour Dec rate hike
WASHINGTON: US central bankers are sharply divided over whether to increase interest rates again this year amid persistently weak inflation, but many still favour a hike, meeting minutes released on Wednesday showed.
The continuing disagreements among members of the Fed could leave investors and market watchers guessing about the path of US monetary policy in the waning months of the year.
Policymakers also said the economic effects of hurricanes Harvey, Irma and Maria, which tore a path of destruction across US territories between August and September, were likely to be only temporary, according to a record of the Fed’s most recent meeting last month.
The Federal Open Committee, the Fed panel which sets US monetary policy, has twice raised rates so far in 2017 despite the fact that inflation has remained tame in the face of steady job creation and falling unemployment.
Economists have been baffled by the circumstances and Fed members have disagreed since 2016 on the near-term threat that prices will rise and that the economy will overheat.
The minutes, which recounted discussions among FOMC members at their most recent meeting on September 19 and September 20, showed such disagreements were no closer to being resolved despite the passage of time.
At that meeting, the Fed left rates untouched at their current range of 1 percent to 1.25 percent and forecast one final rate hike in 2017 as well as three more in 2018.
Observers widely expect that if the Fed chooses to adopt a third rate hike in 2017, it will do so at its final meeting of the year in December. “Many participants thought that another increase in the target range later this year was likely to be warranted,” the minutes said.
Fed chairman Janet Yellen