Minutes reveal Fed officials debated mystery of persistently low inflation

WASHINGTON - Federal Reserve officials struggled in September to come to terms with persistently low inflation but decided to continue to signal the possibility of raising interest rates for a third time this year.

The minutes of their most recent policy meeting released Wednesday show that a group of Fed officials expressed concern that low unemployment could cause inflation to surge and a rate hike was needed, presumably when it meets in December. Another group suggested that no further rate increases were called for in the near term.

Investorshave settled around the notion that a December rate hike is all but guaranteed. The latest CME Group survey, based on trading on the direction of the Fed’s benchmark rate, places a December rate hike at 88 percent.

But some economists express uncertainty. They think the Fed might not raise rates by year’s end unless economic reports between now and its Dec. 12-13 meeting show that inflation has begun to edge toward the Fed’s 2 percent target.