The US Federal Open Market Committee (FOMC) has suggested the conditions needed for the first rate rise since 2006 are “approaching”.
In the minutes from the July meeting, it was revealed that most members of the FOMC “judged that the conditions for policy firming had not yet been achieved, but they noted conditions were approaching that point”.
The document highlighted concerns over low inflation and consequences of a further appreciation in the dollar, but also suggested the committee is starting to divide into two camps. The first contains those concerned about potential downward effects on inflation, while the second group suggested an “appreciable” delay in the normalisation of monetary policy could lead to “an undesirable increase in inflation or have adverse consequences for financial stability”.
Although the committee agreed to keep interest rates unchanged in its July meeting, some participants appeared to be ready to raise rates sooner rather than later.
The minutes stated: “Members generally agreed that additional information on the outlook would be necessary before deciding to implement an increase in the target range. One member, however, indicated a readiness to take that step at this meeting but was willing to wait for additional data to confirm a judgment to raise the target range.”
The next Federal Reserve meeting is scheduled for September 16-17.
