Fed officials: Rate hike may come ‘fairly soon’
Experts say meeting indicates it could be as early as March.
Federal Reserve WASHINGTON — officials this month discussed the need to raise a key interest rate again “fairly soon,” especially if the economy remains strong.
Minutes of the discussions in minutes released Wednesday showed that while Fed officials decided to keep a key rate unchanged at their Jan. 31-Feb. 1 meeting, there was growing concern about inflation if the economy out-performed expectations.
“Several” Fed officials expressed worries that unemployment could fall substantially below the Fed’s 4.8 percent unemployment goal. That could trigger inflation pressures that would require the Fed to boost rates at a faster pace than financial markets currently expect. Unemployment in December was 4.7 percent although it inched back up to 4.8 percent in January.
Most economists had indicated they did not foresee a rate hike until June. But the discussion in the minutes might increase the possibility of a rate increase as soon as March.
Paul Ashworth, chief U.S. economist at Capital Economics, said the “fairly soon” phrase in the minutes “clearly leaves the door open to a March rate hike although ... we still think the Fed will delay until June.”
Mark Hamrick, senior economic analyst for Bankrate.com, said that the minutes show “that policymakers are clearly focused on the possibility of raising rates fairly soon.”
But Hamrick said he believed the Fed will be cautious given the uncertainty surrounding President Donald Trump’s economic program.
The minutes showed that a couple of Fed officials suggested the central bank might need to alter the wording of its policy statement because currently the Fed’s assurances that it planned to raise rates at a “gradual” pace could be “misunderstood as a commitment of only one or two rate hikes per year.”
The minutes were released with the customary three week delay. Fed officials spent time discussing Trump’s proposed stimulus program and its possible impact on the economy, although the