The documents show that most of the 17 Fed officials who participated in the debate expected that the economy would be ready for a rate increase by December.
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“We fully expect (Fed chairwoman Janet) Yellen to promote this heavily at her press conference”, he added, referring to what Ms Yellen would say after the pivotal December 15-16 policy meeting.
There hasn’t been much data or news to affect the price of gold while markets remain glued to the Federal Reserve and the European Central Bank meetings coming next month.
Chris Rupkey, chief financial economist at MUFG Union Bank, in NY, said: “December is a very, very live date for action, and frankly, given the stellar 271,000 jobs report since the October meeting, we would be astounded if they don’t raise rates finally”.
The U.S. Federal Reserve may be heading for a “slow… halting” effort to raise interest rates after it begins its first tightening cycle in about a decade, Atlanta Fed President Dennis Lockhart said on Thursday.
The US dollar index, a measure of the greenback against a basket of currencies, fell from an eight-month high after minutes to the Federal Open Market Committee reaffirmed investors’ expectations for higher interest rates next month.
“The “reasonable confidence” criteria was set up for the decision to ‘liftoff, ‘ and once we are beyond that point… we will have to think about our communications in tracking or monitoring inflation”, he told reporters after his speech.
The central bank has held short-term interest rates near zero since December 2008, a critical element in its policy to stimulate economic growth by encouraging borrowing and risk-taking. Fed officials emphasize that they plan to retreat gradually, because the economy remains relatively weak.
The October meeting came after the release of disappointing September jobs data, which was noted in the minutes. Most thought that labor market slack had largely disappeared, and most continued to predict that inflation would rebound following several years of sluggishness.
“The U.S. financial system appeared to have weathered the turbulence in global financial markets without any sign of systemic stress”, the minutes said.
Underpinning the Fed’s forecast of continued growth is the strength of consumer spending. Fed officials were encouraged by the “solid pace” of consumer spending in the third quarter and generally expected further moderate gains in coming months, according to the minutes.
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While this doesn’t diminish the likelihood of a December rate hike, it does call into question the very strong rally in the U.S. dollar.
