Federal Reserve officials delayed the anticipated interest rate hike due to concerns over global economic activity and inflation, according to minutes released from the Sept. 16-17 meeting between the Federal Reserve Board and the Federal Open Market Committee.
“After assessing the outlook for economic activity, the labor market and inflation, and weighing the uncertainties associated with the outlook, all but one member concluded that, although the U.S. economy had strengthened and labor underutilization had diminished, economic conditions did not warrant an increase in the target range for the federal funds rate at this meeting,” according to minutes from the meeting released on Thursday.
While the committee expressed several improvements to economic activity, some members noted that further market growth may become restrained due to the financial crisis in China as well as in several other emerging countries. Inflation also remained below the committee’s initial projection—a slowdown attributed to declines in energy and commodity prices. Most members, however, agreed that their confidence in inflation would increase if “economic activity continued to expand at a moderate rate and labor market conditions improved further.”
Due to the varying concerns, the committee decided they needed more concrete information to confirm the “economic outlook had not deteriorated” and inflation would move closer to 2%. One member, however, disagreed and wanted to raise the federal rate immediately following the September meeting. That board member argued that “the current low level of real interest rates was not appropriate in the context of current economic conditions.”
- Jennifer Lehman, NACM marketing and communications associate