The Federal Reserve minutes from its meeting in December show officials expressing “significant concern” about slow inflation, despite the milestone move to hike interest rates.
Led by chair Janet Yellen, the US central bank moved to raise short-term interest rates for the first time in nearly a decade at its meeting on 15-16 December, from historically low near-zero rates to 0.25 to 0.5 per cent.
Most of the Fed’s policymakers are banking on inflation rising over the course of 2016, but some warned that the decision to raise rates was a “close call”.
US inflation jumped from 0.2 to 0.5 per cent in December, but remains a far way from the two per cent target the Fed has set.
The minutes released today don’t indicate that the Fed is in any rush to hike rates further, and as Janet Yellen indicated after the December meeting, further hikes are likely to “proceed gradually”.
Although the FOMC meets again at the end of January, most economists are forecasting that the next hike won’t take place until March.