Fed Officials Expect Another Rate Hike This Year, Meeting Minutes Show
Minutes from the most recent Federal Open Market Committee meeting show that most Fed policymakers expect another interest rate hike will likely be needed this year to fight inflation, the AP reported.
The minutes revealed that officials unanimously agreed inflation was still elevated and had not made much progress toward the Fed’s 2% target in recent months. The central bank hiked its key interest rate at the Sept. 15-16 meeting by a quarter-point to about 3.9%, its first increase in three years.
“With regard to the outlook for monetary policy beyond the current meeting, most participants assessed that another increase in the target range for the federal funds rate would likely be appropriate by year end,” the document stated.
That position came with a note of caution, CNBC reported.
“Participants emphasized, however, that they approached each meeting with an open mind and decisions at future meetings would depend on incoming information and its implications for the outlook and the balance of risks,” the minutes said.
The AP reported that the increase defied President Donald Trump’s repeated calls for the central bank to cut rates and prompted Trump to criticize its rate-setting committee, even though he expressed support for Chairman Kevin Warsh, whom Trump appointed earlier this year.
High Costs Cause Struggles
The AP said the rate increase comes as Americans continue to struggle with high costs for groceries, gas and housing, and as affordability has taken on a leading role in the upcoming midterm elections in seven weeks.
In the past few months, longer-term interest rates for mortgages and other borrowing have also risen for various reasons, including rising government debt, heavy borrowing by tech firms to finance data center construction, climbing oil and gas prices, and signs that growth and inflation remain elevated.
The AP noted that the Fed’s rate hike likely played only a limited role in the increase.
Key policymakers have said since the meeting that the Fed can take some time to monitor the economy and the impact of last month’s rate hike before making another move.
The AP noted that Wall Street investors now forecast the Fed will keep the rate unchanged at its next meeting Oct. 28-29, according to futures pricing, and raise the rate when policymakers meet in December.
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