Fed close to rate hike

WASHINGTON: Several voting Federal Reserve policymakers judged a rate hike would be warranted “relatively soon” if the US economy continued to strengthen but doubts on inflation remained, according to the minutes of the Fed’s September policy meeting released on Wednesday.

The minutes of the Sept 20-21 meeting, at which the US central bank held rates steady, also showed the depth of division over timing.

“Several members judged that it would be appropriate to increase the target range for the federal funds rate relatively soon if economic developments unfolded about as ... expected,” the Fed said in the minutes.

Seventeen policymakers participated at the September meeting, of whom 10 had a vote. In the minutes, both voting members and the wider group were divided on how much more they can allow the labour market to strengthen before raising rates.

Some believe that with the US already near full employment, inflation could rise too quickly if the Fed waits too long.

The minutes said “it was noted that a reasonable argument could be made either for an increase at this meeting or for waiting for some additional information on the labour market and inflation.”

US stocks rose slightly following the release of the minutes, while yields on U.S. government debt pared earlier gains.

“They just want a bit more data to be sure. We think they will have those data by the time of the December meeting,” said Ian Shepherdson, an economist at Pantheon Macroeconomics. – Reuters