The Federal Open Market Committee continued to suggest it will raise the target federal funds rate again this year, according to minutes from the FOMC’s September 19-20 meeting. During the meeting, committee members decided to hold rates at 1 to 1.25 percent. The Committee will meet later this month and again in December. There was some confusion regarding sluggish inflation as low unemployment has been expected to cause wage and spending increases. However, inflation continues to remain below the Fed’s 2 percent goal. “Many participants expressed concern that the low inflation readings this year might reflect not only transitory factors, but also the influence of developments that could prove more persistent,” the minutes read.
The minutes confirmed the Committee will initiate the balance sheet normalization program in October. The balance sheet is swollen with $4.5 trillion in securities purchased as part of quantitative easing programs between 2008 and 2014.
FOMC members noted that Hurricanes Harvey, Irma, and Maria “would affect economic activity in the near term, but past experience suggested that the hurricanes were unlikely to materially alter the course of the national economy over the medium term.” The Committee expects higher prices for gasoline and some other products to temporarily boost inflation.