Exclusive interviews with leading policymakers that convey the true policy message that impacts markets.
Reporting on key macro data at the time of release.
Real-time insight on key fixed income and fx markets.
- Emerging MarketsEmerging Markets
Real-time insight of emerging markets in CEMEA, Asia and LatAm region
- MNI ResearchMNI Research
Actionable insight on monetary policy, balance sheet and inflation with focus on global issuance. Analysis on key political risk impacting the global markets.
- About Us
--Several Officials Want to Feel More Confident on Infl Before Hike
--Some Other Officials Worried About Upside Risk to Infl
--Hurricanes to Distort Data for Next Few Months; No Med-Term Impact
By Jean Yung
WASHINGTON (MNI) - Many Federal Reserve policymakers in their
September meeting worried over whether recent low inflation readings
this year were transitory and some said they wanted to feel more
confident that inflation was moving higher before raising interest rates
again. Yet at the same time, others expressed concern over upside risks
for inflation given the tightness of the labor market, minutes of the
meeting showed Wednesday.
The account highlights the range of opinions on the Federal Open
Market Committee after their preferred measure of inflation, the core
personal consumption expenditures price index, decelerated from a 1.9%
annual pace earlier this year to just 1.4% in August.
"Many participants thought that another increase in the target
range later this year was likely to be warranted if the medium-term
outlook remained broadly unchanged," the account of the Sept. 19-20
But, "Several others noted that, in light of the uncertainty around
their outlook for inflation, their decision on whether to take such a
policy action would depend importantly on whether the economic data in
coming months increased their confidence that inflation was moving up
toward the Committees objective," the minutes said.
"A few participants," which includes nonvoters on the FOMC,
"thought that additional increases in the federal funds rate should be
deferred until incoming information confirmed that the low readings on
inflation this year were not likely to persist and that inflation was
clearly on a path toward the Committees symmetric 2 percent objective
over the medium term."
The Fed kept its key policy rate steady to a target range of 1.00%
to 1.25% at the September meeting while launching its planned balance
sheet reduction program. The minutes showed that all officials though it
was appropriate to hold rates steady and "nearly all" supported saying
in their post-meeting statement that "a gradual approach to increasing
the federal funds rate will likely be warranted."
Still, "many participants" expressed concern that the low inflation
readings might reflect not only transitory factors, "but also the
influence of developments that could prove more persistent," and
concluded that hitting the Fed's 2% target "might take somewhat longer
than they anticipated earlier."
"It was noted that some patience in removing policy accommodation
while assessing trends in inflation was warranted," the minutes said,
adding that a few officials thought no more hikes were called for in the
near term or that the upward trajectory for the fed funds rate "might
appropriately be quite shallow."
Among the voters, some emphasized that they would be "evaluating
incoming information to assess the likelihood that recent low readings
on inflation were transitory and that inflation was again on a
trajectory consistent with achieving the Committee's 2 percent objective
over the medium term."
Officials cited the tight labor market as supporting inflation over
the medium term. Most officials said they expected wage increases to
pick up as the labor market strengthened further, and a couple of them
"cautioned that a broader acceleration in wages may already have
begun," the minutes said.
"Many participants continued to believe that the cyclical pressures
associated with a tightening labor market or an economy operating above
its potential were likely to show through to higher inflation over the
medium term," the minutes said.
Judging the economy more broadly, Fed officials noted that the
expansion was evolving mostly as expected and even the unusually
destructive hurricane season won't have any material impact over the
While higher prices for gasoline and other items were likely to
boost inflation temporarily, and storm-related disruptions could hold
down GDP growth in the third quarter, officials saw little change in
their outlook for growth and the labor market.
Stock prices were higher and long-term interest rates and the
exchange rate of the dollar were declining between the July and
September FOMC meetings, officials noted, creating accommodative
financial conditions. That drew the attention of a couple officials, who
said such easy conditions over time could pose risks to financial
--MNI Washington Bureau; tel: +1 202-371-2121; email: