New York, NY (BBN)– Minutes from last month’s US Federal Reserve meeting have shown its decision to keep interest rates unchanged was a “close call” for some officials.
Minutes of the 20-21 September meeting showed policymakers were nearer to raising rates than at any time since last December, reports BBC.
They only held off because inflation was still running below their 2.0 per cent target and there was no sign of rising wage pressure.
Rates were kept between 0.25 per cent and 0.5 per cent.
It lends further weight to the expectation of an interest rate rise by the end of the year.
According to the minutes, “several members judged that it would be appropriate to increase the target range for the federal funds rate relatively soon if economic developments unfolded about as expected.”
They also said “it was noted that a reasonable argument could be made either for an increase at this meeting or for waiting for some additional information on the labour market and inflation”.
Seventeen Fed officials participated at the September meeting, 10 of which had a vote.
However, both voting members and the wider group were split on how much longer they should allow the labour market and inflation to improve before raising rates.
Several of the committee’s more hawkish members even said waiting too long could send the US into recession.
“A few participants referred to historical episodes when the unemployment rate appeared to have fallen well below its estimated longer-run normal level,” the minutes explain.
“They observed that monetary tightening in those episodes typically had been followed by recession and a large increase in the unemployment rate.”
In the end, three voting members dissented in favour of an immediate hike while a majority decided against raising rates “for the time being”.
At the time, the Federal Open Market Committee said it expected inflation to remain low in the near term, “in part because of earlier declines in energy prices”.
Many economists expect the Fed to hold rates at the next meeting in November, but increase them modestly in December.
The S&P 500 index held steady following the release, reaching 2,141.83 in mid-afternoon trading – up 0.24 per cent.