Minutes from the December meeting of the Federal Reserve’s monetary policy committee suggest that the central bank could raise its interest rate target further this year, albeit tentatively.
The minutes, customarily released a month after the last meeting, show that every voting member of the central bank’s leadership was in favor of raising rates, despite repeated protests from President Trump.
The Fed’s leadership also said it could continue to hike rates this year, but that those interest rate increases would only follow a strengthening economy and the potential accompanying rise in inflation.
Leadership for the central bank, including Fed Chairman Jerome Powell, have stressed that they will not blindly increase rates if they see doing so as harmful to the economy. They’ve done so amid unusually public sustained criticism from the president, who has had to deny he’s considered attempting to remove Powell, a move that could shake short- and long-term confidence in the U.S. economy.
[Related: Fed Chairman Jerome Powell says he would not resign if Trump asked him to]
“Members agreed that the timing and size of future adjustments to the target range for the federal funds rate would depend on their assessment of realized and expected economic conditions relative to” the Fed’s goals on inflation and maximum employment, the minutes read.
The central bank has been in the process of returning short-term interest rates to a more normal level after keeping them close to zero for years to aid the recovery from the 2008 global financial crisis.
The minutes from December’s meeting noted the Trump administration’s trade war, as well as uncertainty over the outcome of Brexit and the overall global economic outlook in 2019, contributed to major stock market losses late in the year.
“In part, the deterioration in risk sentiment appeared to stem importantly from uncertainty about the state of trade negotiations between China and the United States,” the minutes read. “In addition, investors pointed to concerns about the global growth outlook, the unsettled state of Brexit negotiations, and uncertainties about the political situation in Europe.”
The Fed also acknowledged its own decision-making plays a role in stock market expectations and noted that statements by Powell and other Fed leaders contributed to lowered projections from financial analysts for rate hikes this year, perhaps setting the stage for the central bank to slow its momentum.
“The deterioration in market sentiment was accompanied by a significant downward revision in the expected path of the federal funds rate based on federal funds futures quotes,” the minutes read.
