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FOMC saw rate hike as relatively soon, Minutes show

Wednesday, Nov 23 2016
FOMC saw rate hike as relatively soon, Minutes show

Federal Reserve officials saw a strengthening case to raise interest rates as the labor market tightened, with some saying a hike should happen in December, according to minutes of their November gathering released Wednesday in Washington. “Some participants noted that recent committee communications were consistent with an increase in the target range for the federal funds rate in the near term or argued that to preserve credibility, such an increase should occur at the next meeting,” the record of the Federal Open Market Committee meeting showed. Many officials said a rate rise could be appropriate “relatively soon,” data permitting, it said.

The minutes showed diverse views on the amount of labor-market slack and the risks surrounding their 2 percent inflation goal. The November minutes also showed officials emphasized that near-term changes in the benchmark borrowing cost would be dependent on economic data, with the expectation that “only gradual increases” would be warranted. FOMC members noted that labor market conditions had improved “appreciably.” “It was noted that allowing the unemployment rate to modestly undershoot its longer-run normal level could foster the return of inflation to the FOMC’s 2 percent objective over the medium term,” the minutes said.

 

Euro is currently being traded around 1.0550 level, Sterling is at 1.2460 area, while Aussie is near 0.74 handle.

 

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