If economy heats up, rate hikes may hasten

WASHINGTON — Fe d e r a l R e s e r v e o f f i c i a l s , w h o boosted a key interest rate last month, said they might need to accelerate future rate hikes if a faster-growing economy pushes down the unemployment rate farther than currently expected.

M i n u t e s o f t h e Fe d ’ s December meeting released Wednesday showed that Fed officials discussed the impact of Donald Trump’s proposed economic pro - gram of tax cuts, deregulation and increased infrastructure spending. The Fed officials attributed the surge in stock prices, the increase in bond rates and the stronger dollar following the election to enthusiasm among investors about Trump’s plans to bolster economic growth.

The minutes said Fed offi- cials believed they could maintain plans for gradual rate hikes but would need to be ready to hasten those increases if necessary to fight inflation.

The minutes never mentioned Trump by name but did note that the election and possible changes in the government’s budget and tax policies had increased uncertainty about the economy’s outlook.

“A l m o s t a l l ( p a r t i c i - pants) ... indicated that the upside risks to their forecasts for economic growth had increased as a result of prospects for more expansionary fiscal policies in coming years,” the minutes said.

A n a l y s t s c i t e d t h e increased uncertaint y as the key take-away from the minutes.

“The Fed is sticking with the idea that rates will rise at a gradual pace, but that’s open to wide interpretation and a substantial fiscal easing could change things quickly,” said Ian Shepherdson, chief economist for Pantheon Macroeconomics.

He said he still expects the Fed’s next rate hike to occur in March, as long as economic growth remains solid and the details of Trump’s economic package become clearer.

The minutes covered the Fed’s Dec. 13-14 meeting. At that meeting, the central bank boosted its benchmark rate by a quarter-point to a still-low range of 0.5 percent to 0.75 percent.

I n a n e ws c o n f e r e n c e following the meeting, Fed Chair Janet Yellen stressed that the Fed still intended to move rates up at a gradual pace and the timing of future moves would be dependent on how the economy unfolds.