e_Paper (25 November 2016)

14
FRIDAY, NOVEMBER 25, 2016
DT
Business
Most US Fed members support
rate hike ‘relatively soon’
• AFP, Washington
Most US interest rate policymakers believe a
rate hike to be appropriate “relatively soon,”
boosting the chances of an increase in December,
according to meeti ng minutes released
early yesterday.
Some participants at the Federal Reserve
policy meeting early this month said an rate
increase “should occur at the next meeting”
to “preserve credibility,” because failure to
do so would be counter to the public signals
sent so far, the minutes showed.
However, members also saw potential
dangers abroad, with Britain due to exit the
European Union, European banks suffering
capital weakness, a strengthening US dollar
and rapid credit growth in China.
The Federal Open Market Committee,
which sets US monetary policy met just
days before presidential elections that ended
in a surprise victory for Republican Donald
Trump.
The FOMC after that meeting once again
stated that the case for a rate hike was
stronger but that it would wait for more signs
of progress toward the dual objectives of two
percent inflation and full employment.
Despite that 8-2 vote to stay on hold, “A
few participants advocated an increase at
this meeting,” the minutes said.
After raising rates last December for the
first time in nearly a decade, the Federal
Reserve so far has held steady, to avoid interrupting
a fragile recovery despite expectations
early in the year that there might be
several increases in 2016.
However, policymakers at last appear set
to pull the trigger at their final meeting of
the year December 13-14, to ward off inflation
amid signs of tightening labor markets.
During congressional testimony last
week, Fed Chair Janet Yellen strongly suggested
a rate hike was likely next month,
giving markets a clear signal.
The US economy posted strong gains in
the third quarter, growing at 2.9% and added
a solid 161,000 jobs in October, continuing
the robust job creation of recent months.
Still, FOMC members noted at the last
meeting that growth figure had partly been
driven by “transitory factors,” such as “a
surge in agricultural exports and a bounceback
in inventory investment.” •
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