December Rate Hike Remains on Track, Fed Minutes Show By Investing.com

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The Fed kept rates unchanged on Thursday.



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Investing.com – Federal Reserve policymakers continued to support gradual interest rate hikes on the back of underlying strength in the labor market and steady inflation, keeping a December rate hike firmly on track, according to the minutes of its November meeting, published on Thursday.

The Fed kept its benchmark rate in a range of 2% to 2.25% at the conclusion of its two-day policy meeting on Nov. 8, but signaled a plan for further rate hikes in a bid to keep inflation in check.

Steady inflation and a strong labor market data remained the mainstay of the Fed’s message, supporting the central bank’s case to press ahead with rate increases, the minutes showed.

“Members continued to expect that further gradual increases in the target range for the federal funds rate would be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective over the medium term,” the Fed’s minutes showed.

The release of the minutes comes as expectations for a more aggressive pace of rate hikes have fallen amid intense debate on how close interest rates are to neutral.

Fed Chairman Jerome Powell said Wednesday that interest rates were “just below” neutral, dampening the optimism for a more aggressive rate-hike cycle.

Powell’s remarks represent a dovish tilt away from the hawkish tone that had sent equity markets tumbling last month, when he said rates were far from neutral and hinted at possible overshoot.

The minutes did little to alter odds for December rate hike, with more than 80% of traders expecting the Fed to raise rates for a fourth time this year on Dec. 19, according to

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