Most members of the Federal Reserve’s monetary policy committee expected that the central bank would raise interest rates in December barring surprising bad news, notes from the central bank’s October meeting released Wednesday showed.
The minutes of the October meeting stated that “most participants” in the committee thought that the conditions for a rate hike “could well be” met by December, with the caveat that news that changed the outlook for the economy as a whole could affect that decision.
While an unspecified number of officials did not think that the economy would be strong enough by December for an increase in rates, others thought that it was already past time for rates to go up.
The minutes also said that Fed members included a reference to the possibility of raising rates in October’s announcement to ready the public for the possibility that they would “initiate the normalization process” – Fed jargon for beginning to raise interest rates.
The notes are the latest sign that the central bank will raise its interest rate target by 0.25 percent at its meeting on Dec. 15 and 16.
The Fed’s October meeting took place before the strong jobs report for October, which some Fed members said increased confidence in the strength of the economy.
Now, the question increasingly will become not when rate hikes are coming, but how quickly Fed chairwoman Janet Yellen and other members will raise them, and when they might begin to shrink the Fed’s $4.5 trillion balance sheet.
The Fed has held short-term interest rates near zero since 2008 in an attempt to stimulate the economy. In recent weeks, investors have begun to expect that the Federal Reserve will raise rates in December. The odds of a rate hike from the current near-zero target were above 70 percent Wednesday, as implied by bond market prices.
