many fed members favor december rate hike
Last Updated : GMT 09:40:38
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Last Updated : GMT 09:40:38
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'Many' Fed members favor December rate hike

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Themuslimchronicle, themuslimchronicle'Many' Fed members favor December rate hike

if the Fed chooses to adopt a third rate hike in 2017, it will do so at its final meeting of the year
Washington - AFP

US central bankers are sharply divided over whether to increase interest rates again this year amid persistently weak inflation, but many still favor a hike, meeting minutes released Wednesday showed.

The continuing disagreements among members of the Federal Reserve 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.

Those concerned about the looming danger of inflation believed raising rates at "an unduly slow pace" could cause price pressures to overshoot the central bank's two percent target.

They also worried that too much easy money could encourage risk taking by investors, threatening financial stability, and that delaying too long could force the Fed in the future to jack up rates suddenly, harming the economy.

However, the account of the meeting made clear that an important faction of policymakers still see no clear reason to act immediately.

"Many participants," the minutes said, believed low inflation could be a longer-term trend. "And it was noted that some patience in removing policy accommodation while assessing trends in inflation was warranted."

Among this group, a few believed "no further increases" were called for, adding that "the upward trajectory of the federal funds rate might appropriately be quite shallow."

source: AFP

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many fed members favor december rate hike many fed members favor december rate hike

 



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