U.S. central bankers debating the merits of raising interest rates last month described the decision as a close call, with several saying a rate hike was needed “relatively soon,” minutes of the September meeting showed.
“Several members judged that it would be appropriate to increase the target range for the federal funds rate relatively soon if economic developments unfolded about as the committee expected,” the minutes from the Sept. 20-21 gathering in Washington showed. “It was noted that a reasonable argument could be made either for an increase at this meeting or for waiting for some additional information on the labor market and inflation.”
The Federal Open Market Committee left the benchmark lending rate unchanged in a range of 0.25 percent to 0.5 percent for the sixth straight meeting last month, even as a majority of the 17 participants still forecast at least one hike this year.
Kansas City Fed President Esther George, Cleveland’s Loretta Mester and Eric Rosengren of Boston dissented at the meeting in favor of higher rates. The minutes showed the close decision was also reflected in the comments of non-voting members.
“Among the participants who supported awaiting further evidence of continued progress toward the committee’s objectives, several stated that the decision at this meeting was a close call,” the minutes stated.
Fed officials have deferred rate increases at every meeting this year as the U.S. economy suffered a number of setbacks, from slowing Asian growth to the U.K.’s vote to leave the European Union. Inflation that’s been below the central bank’s 2 percent target for more than four years has reduced the urgency to hike.
Uncertainties over the economic outlook and the desire by the committee to assure that job growth remains strong are likely to delay another rate increase until December, federal funds futures traders are betting. Fed officials next meet Nov. 1-2, just before the U.S. election on Nov. 8.
“Many members remarked that there were few signs of emerging inflationary pressures or that progress on inflation had been slow,” the minutes stated. Among participants in the meeting, “a substantial majority now viewed near-term risks to the economic outlook as roughly balanced,” they stated.