Minutes of the Federal Reserve's last meeting released Wednesday signaled broad support for another interest-rate hike in September with the economy growing strongly, but also deep concern that a major escalation in ongoing trade disputes could derail the economy.
Many Fed officials said that if data continue to support their outlook, “it would likely soon be appropriate to take another step in removing policy accommodation,” the minutes said. Fed watchers take that language as support for a move at the next policy meeting, set for late September.
Current market odds are signaling a 96% probability of a rate hike in September and 60% chance of another in December.
At the same time, officials said they might have to pause from their gradual rate path if there is an escalation in international trade disputes. Fed officials were unanimous in their view that a trade war represented a major downside risk to the economy.
Given the complex nature of trade issues “a major trade escalation” presented a challenge in determining the appropriate way to respond, some officials said.