Fed minutes: Stronger outlook increases the chance for more rate hikes

Thursday, 22 February 2018 02:29 WIB

Federal ReserveFOMCThe Fed


Minutes of the Jan. 30-31 Federal Open Market Committee meeting released Wednesday showed officials saw a stronger economy than at the end of 2017 and that more rate hikes were in the offing.

The strengthening “increased the likelihood that a gradual upward trajectory of the federal funds rate would be appropriate.” To convey this message, officials altered their statement to point to “further gradual increases,” according to the minutes.

Markets have become worried that the Trump tax cuts would cause the labor market to overshoot full employment, leading to a higher wages and a surge of inflation.

The minutes show that while several officials expected inflation to move higher this year, only “a couple” of officials were worried about the possibility that the economy would overheat.

At the meeting, Fed officials agreed to hold rates steady in a range of 1.25% to 1.5%.

The Fed had penciled in three rate hikes at its December meeting. The minutes from January do not indicate whether any officials were pushing for more.

Source: Marketwatch




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