Fed policymakers divided over rate-hike logic in September, minutes show
TLT•The Fed voted unanimously to raise rates by a quarter percentage point in September, but policymakers disagreed on the rationale. Most saw another increase as likely appropriate by year end, while investors expected rates to remain at 3.75%-4.00% in October and rise again in December.
1. Different reasons for the hike
Minutes from the Fed’s September 15-16 meeting showed policymakers split over the reasoning behind their unanimous quarter-point rate increase. Some saw the move as protection against energy and other price shocks, while a more hawkish group viewed it as necessary to guard against demand-driven inflation.
2. Outlook for further increases
Several participants said they viewed the current policy rate as not restrictive or only mildly restrictive. Most assessed that another increase would likely be appropriate by year end, while investors expected the Fed to hold rates at 3.75%-4.00% at its October meeting and raise them again in December.
