Fed officials were divided during the September 20-21 Federal Open Market Committee (FOMC) meeting as to whether a rate hike was warranted, according to the minutes of the meeting released today.
The minutes noted that “a reasonable argument could be made either for an increase at this meeting or waiting for some additional information on the labor market and inflation,” and that several members believed that a rate hike would be appropriate “relatively soon” if economic developments continued as expected.
Though members generally acknowledged that labor market conditions improved over the year, some noted that increased labor force participation may cause the labor supply to expand more than previously expected.
Regarding inflation, several members remarked that inflation progress had been “slow,” while some noted that PCE price inflation was close to meeting the Committee’s 2 percent objective.
Three members dissented from the decision to maintain the target rate at 25-50 bps, voting instead to raise rates by 25 basis points. The dissenters cautioned that if rates were left low for too long, the unemployment rate may be pushed below its longer-run normal level over the coming year.
Read the FOMC Minutes