Some Federal Reserve officials said a rate rise needs to happen next month "to preserve credibility", according to minutes of their November meeting released today.
They said an interest rate increase was incoming "relatively soon", if incoming data continued to reflect an improving economy, with some explicitly calling for a move next month.
Some participants, a wider group than voting members, said "to preserve credibility, an increase should occur at the next meeting", according to the minutes. It indicated that the Fed was leaning towards raising rates at its 13-14 December gathering, as economists had expected. That's as long as there's no upset to the economy.
The market currently is pricing in a near 100 per cent probability of a rate hike in December.
"Most participants expressed a view that it could well become appropriate to raise the target range for the federal funds rate relatively soon," they said.
And they saw a strengthening case to raise interest rates as the labour market tightened. But it's not cut and dry: some wanted to hold off on raising rates until more progress on inflation and employment was signalled, while another was raring to go in early November.
American ratesetters left their benchmark short-term interest rate unchanged at the meeting earlier this month, which took place before Donald Trump won the US presidential election.
If the hike does go ahead as expected next month, it will mark the second time rates have been risen since the financial crisis when the bank pushed rates to a record low. Numerous expected hikes have since failed to materialise.
In December last year, the Fed raised its benchmark rate for the first time in seven years, from near zero to its current level of between 0.25 per cent and 0.5 per cent.
Last week, Yellen hinted that the time was approaching for the highly-anticipated second hike, saying the job market had made further improvements this year and inflation was starting to pick up (though still below the Fed’s two per cent target). A rise will come “relatively soon” apparently.
The dollar spiked today, surging to its highest since March 2003, buoyed by upbeat US economic reports that reinforced the expectations of a rate hike.