Fed Minutes Provide Further Hints At December Rate Hike
29 Noviembre 2018 - 8:25AM
RTTF2
Minutes from the Federal Reserve's monetary policy meeting held
earlier this month are likely to reinforce expectations for another
quarter-point increase in interest rates next month.
The minutes of the Federal Open Market Committee meeting said
almost all participants agreed another increase in rates was
"likely to be warranted fairly soon."
The Fed noted a near-term rate hike would be dependent on
incoming information on the labor market and inflation coming in
line with or stronger than current expectations.
CME Group's FedWatch tool currently indicates an 82.7 percent
chance the Fed will raise rates to a range of 2.25 to 2.50 percent
at the two-day meeting scheduled for December 18th and 19th.
However, the minutes noted a few participants continued to favor
gradual increases in rates but expressed uncertainty about the
timing of such increases.
A couple of participants also noted rates might currently be
near a neutral level and warned further increases could unduly slow
economic growth and put downward pressure on inflation and
inflation expectations.
In remarks to the Economic Club of New York on Wednesday, Fed
Chairman Jerome Powell described the current level of interest
rates as "just below" neutral.
"Interest rates are still low by historical standards, and they
remain just below the broad range of estimates of the level that
would be neutral for the economy--that is, neither speeding up nor
slowing down growth," Powell said.
The latest remarks seemed to conflict with comments Powell made
early last month, when he described rates as a "long way from
neutral."
Meanwhile, the minutes of the latest Fed meeting said
participants agreed information received since the September
meeting indicated the labor market had continued to strengthen and
that economic activity had been rising at a strong rate.
Participants generally indicated little change in their
assessment of the economic outlook, with above-trend economic
growth expected to continue before slowing to a pace closer to
trend over the medium term, the minutes said.
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