Fed policymakers prepare to hike interest rates “fairly soon”

 
Mark Sands
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Yellen Testifies At Joint Economic Committee Hearing On Economic Outlook
Yellen has chaired the Fed since December 2014 (Source: Getty)

Federal reserve policymakers have hinted that it may be time to raise US interest rates again – “fairly soon” – if jobs and inflation continue to meet expectations.

Minutes from the 31 January meeting, which saw the American central bank keep rates unchanged, also reflected uncertainty, with some attendees raising concerns that it may be “some time” before the outlook becomes clearer.

“Many participants expressed the view that it might be appropriate to raise the federal funds rate again fairly soon if incoming information on the labour market and inflation was in line with, or stronger than, their current expectations,” the minutes said.

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The minutes come after Fed chair Janet Yellen warned it would be “unwise” to wait too long before hiking interest rates.

However, the minutes released today also show that 10 voting policymakers expressed only a “modest risk” that inflation would increase significantly, and that the Fed would “likely have ample time to respond” in the case that prices were put under pressure.

The US dollar, which was boosted by hawkish comments from various Fed officials in the previous session, turned lower after the minutes were released.

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On Trump, policymakers said they were keen to see more of the new US President's economic plans before assessing their potential impact on the outlook.

“Participants again emphasised their considerable uncertainty about the prospect for changes in fiscal and other government policies, as well as about the timing and magnitude of the net effects of such changes,” the minutes said.

The rate-setting committee next meets on 14 March and 15 March.

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