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Fed minutes: Fed split over path of rate hikes

Published 08/16/2017, 01:59 PM
Fed members divided on rate-hike cycle
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Investing.com – Federal Reserve policymakers were split on the outlook for future rate hikes, as fed members struggled to balance concerns over the slowdown in inflation with the growth in the labor market, according to the minutes of the Fed's last policy meeting released on Wednesday.

The details of the meeting, at which the U.S. central bank voted to keep rates unchanged, also showed that "some participants" expressed concerns about the slowdown in inflation, and said the Fed could afford to stand pat on interest rates until the decline in inflation subsided.

"... some participants expressed concern about the recent decline in inflation, which had occurred even as resource utilization had tightened, and noted their increased uncertainty about the outlook for inflation," the minutes said. "They observed that the Committee could afford to be patient under current circumstances in deciding when to increase the federal funds rate further"

On the Fed's plan to reduce its $4.5tn balance sheet, members agreed that the process of reducing the Fed's large portfolio of Treasury bonds and mortgage-backed securities should begin "relative soon" while others wanted to wait until the upcoming policy meeting.

"Participants generally agreed that, in light of their current assessment of economic conditions and the outlook, it was appropriate to signal that implementation of the program likely would begin relatively soon," the minutes said

Riskier assets ticked lower while gold added to gains as market participants viewed the minutes as dovish, after Fed members appeared less willing to view the slowdown in inflation as transitory.

"In considering the timing of further adjustments in the federal funds rate, they would be evaluating incoming information to assess the likelihood that recent low readings on inflation were transitory".

The dollar fell 0.29% to trade at 93.47 while the U.S. 10-Year traded lower at 2.236.

Gold Futures, rose 0.52% to $1,286.31.

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