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 Voters 'Reasonably Confident' Near-Term Rate Hike Appropriate
--Many Officials Saw Some Likelihood of Infl Below Target for Longer
--GOP Tax Cuts Could Spur Business Fixed Investments
By Jean Yung
WASHINGTON (MNI) - With the economic outlook little changed in the
run-up to its Nov. 1 gathering, many Federal Reserve officials deemed
another imminent increase in their benchmark short-term interest rate to
be appropriate even as worries over a longer lasting shortfall in
inflation deepened, minutes of the meeting showed Wednesday.
That should support overwhelming market expectations that the Fed
will raise its key policy rate to a target range of 1.25% to 1.50% at
the conclusion of its next meeting on Dec. 13.
Several voting members "were reasonably confident that the economy
and inflation would evolve in coming months such that an additional
firming would likely be appropriate in the near term," the minutes said.
Among all of the Federal Open Market Committee, "many participants
thought that another increase in the target range for the federal funds
rate was likely to be warranted in the near term if incoming information
left the medium-term outlook broadly unchanged."
Still, policymakers appeared to be increasingly uncertain why
inflation has not perked up even as the labor market tightened and the
unemployment rate dropped to 4.1%. The Fed's preferred measure of
inflation, the core personal consumption expenditures price index, fell
sharply from a 1.9% annual pace earlier this year to just 1.3% in
"With core inflation readings continuing to surprise on the
downside, however, many participants observed that there was some
likelihood that inflation might remain below 2 percent for longer than
they currently expected," the minutes said.
One possibility for the low readings was cited as "the influence of
developments that could prove more persistent," including a decline in
longer term inflation expectations or secular factors such as
technological innovation disrupting existing business models. But those
theories proved controversial among the FOMC members.
While several participants, which include nonvoters, expressed
concern that weak inflation could lead to a decline in longer term
inflation expectations "or may have done so already," others noted the
measure had remained stable this year.
The Fed kept its policy rate steady at a target range of 1.00% to
1.25% at the November meeting as expected. The minutes showed that all
officials thought 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."
Officials cited the tight labor market as supporting inflation over
the medium term. Payroll growth remained "well above the pace likely to
be sustainable in the longer run" and was likely to ripple across wages.
A few officials said they saw recent data as indicating some firming in
wage growth while a few others saw wages as little changed over the past
Judging the economy more broadly, Fed officials again noted that
the expansion was evolving mostly as expected and even the unusually
destructive hurricane season won't have any material impact over the
Officials "anticipated appreciable increases in business fixed
investment" on account of improved demand from abroad, rising profits
and the substitution of capital for labor as competition for the latter
A few officials noted the prospects for significant tax cuts
under the Republican proposal "had risen recently," saying "the
expansion in business fixed investment could be given additional impetus
if legislation involving tax reductions was enacted."
Financial conditions remained accommodative, causing several
officials to express concerns about a potential buildup of imbalances.
However, a low neutral rate of interest partly explained the elevated
asset prices, and strengthened regulation has increased the resilience
of the financial system to any sharp reversal in asset prices, the
--MNI Washington Bureau; tel: +1 202-371-2121; email: email@example.com