Minutes of the September meeting show a unanimous quarter-point hike, with officials divided on whether it was insurance against price shocks or a shift to tighter policy. Most saw another increase as likely by year end.
The Federal Reserve released minutes on Wednesday of its September 15-16 meeting, at which officials voted unanimously to raise the policy rate by a quarter of a percentage point, Reuters reported from Washington. The record showed a split over the reason for the move. Some participants treated the hike as a way to limit the spread of energy and other price shocks. A more hawkish group treated it as needed against emerging demand-driven inflation.
The minutes said many participants argued that a higher path for the target range would be prudent as insurance if demand proved stronger than expected or if further supply shocks arrived. Others saw the higher rate as important so recent shocks did not broaden into prices. A couple tied their support to a higher estimate of the neutral rate. Several said they viewed the current rate as not restrictive, or only mildly so.
Most participants assessed that another increase in the target range would likely be appropriate by year end, the minutes said. Reuters said investors, after paring earlier bets on back-to-back hikes, were pricing the policy rate to stay in a 3.75 to 4.00 percent range at the October 27-28 meeting and to rise again at the December 8-9 meeting. Bloomberg reported that all 19 officials backed the September decision.
The next decision is the late-October meeting, ahead of US midterm elections. Reuters said recent weaker jobs and inflation data, and comments from officials, had added to the view that policymakers might wait for more evidence before moving again, even as some still argue for faster hikes.
No new rate was set on Wednesday. The minutes are a record of the September debate, not a fresh vote.