Interest Rates Likely to Rise in December, Recap of Fed Meeting Shows

Interest Rates Likely to Rise in December, Recap of Fed Meeting Shows

WASHINGTON — The Federal Reserve is poised to raise interest rates at its next policymaking meeting in mid-December and to continue raising rates next year, according to the minutes of the central bank’s last meeting published on Thursday.

WASHINGTON — The Federal Reserve is poised to raise interest rates at its next policymaking meeting in mid-December and to continue raising rates next year, according to the minutes of the central bank’s last meeting published on Thursday.

The minutes said most Fed officials were confident about the economy when they met in early November.

Some Fed officials at the meeting said they were less certain about the economic outlook and about the Fed’s policy plans. But the account of the meeting provided no indication that the central bank is preparing to pause, notwithstanding the hopes of investors and frequent public attacks by President Trump.

“Almost all participants expressed the view that another increase in the target range for the federal funds rate was likely to be warranted fairly soon,” barring unpleasant developments, the minutes said.

 

The Fed’s policy arm, the Federal Open Market Committee, last raised its benchmark rate in September, to a range of 2 percent to 2.25 percent, then left the rate unchanged at the November meeting. The central bank is widely expected to increase the rate by a quarter of a percentage point in December.

The stock market surged on Wednesday after investors interpreted a speech by the Fed’s chairman, Jerome H. Powell, as an indication that the central bank may leave rates closer to the current level. The minutes, however, contained no hint of any such shift in plans at the time of the meeting. Analysts said they were skeptical that the Fed meant to signal a change on Wednesday.

Paul Ashworth, chief United States economist at Capital Economics, said that the market had overreacted, and that the minutes “do not suggest that Fed officials anticipated an imminent pause in the tightening cycle.” He said he expected a rate increase in December and two more during the first half of 2019.

The market’s reaction on Thursday was much more subdued, with the S&P 500 index closing down 0.2 percent.

The Fed is seeking to wean markets from the expectation that it would continue to raise its benchmark rate every quarter. A rate increase in December would be the fifth straight quarterly increase.

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