Fed officials discussed possible rate hike ‘fairly soon’
WASHINGTON — Federal Reserve officials earlier this month discussed the need to raise a key interest rate again “fairly soon,” especially if the economy remains strong.
Minutes of the discussions in minutes released Wednesday showed that while Fed officials decided to keep a key rate unchanged at their Jan. 31-Feb. 1 meeting, there was growing concern about inflation if the economy out-performed expectations.
“Several” Fed officials expressed worries that unemployment could fall substantially below the Fed’s 4.8 per cent unemployment goal. That could trigger inflation pressures that would require the Fed to boost rates at a faster pace than financial markets currently expect. Unemployment in December was 4.7 per cent although it inched back up to 4.8 per cent in January.
Most economists had indicated they did not foresee a rate hike until June. But the discussion in the minutes might raise the possibility of a hike as soon as March.