They point to a vigorous debate within the Fed over a number of key data points including inflation and the timing of a hike.
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However, other economists argue that with inflation still so low, the central bank may decide to wait until December before beginning to raise rates.
Analysts had been betting on a rate hike when Fed officials next meet on September 16-17 given sustained strength in the world’s largest economy.
“It just shows that they are extremely sensitive to the signs of weakness in global growth, and without the backdrop of inflation near the 2-percent target, it will be hard to justify, just on the basis of low unemployment, raising rates”. The central bank is eyeing employment and inflation as it considers its first tightening of monetary policy since the crisis.
“Most judged that the conditions for policy firming had not yet been achieved, but they noted that conditions were approaching that point”, the minutes from the Federal Open Market Committee’s (FOMC) said. However, the Fed has been saying that its rate decision depends on whether inflation will reach the goal of two percent after running below that for more than three years.
The dollar index traded in a tight 40-basis-point range and was last was 0.1 percent lower on the day.
“European markets are tracking further declines in Asia overnight as concerns remain over the growth prospects of the Chinese economy“, said Andy McLevey, head of dealing at Interactive Investor. But “several participants noted that a material slowdown in Chinese economic activity could pose risks to the U.S. economic outlook”. Earlier this month, China announced a devaluation of the yuan, a move that roiled global markets.
Much of the market reaction hinges on the Fed’s concern about particular areas of the U.S. economy, including the discussion of the effects of deflationary forces from commodities and the strong dollar.
U.S. gold for December delivery (GCcv1) settled up 2.2 percent at $1,153.20 an ounce.
U.S. stocks closed down Wednesday as investors reacted to mixed signals from the Federal Reserve of a possible interest rate hike in September.
The US has been in economic recovery since July 2009, with unemployment in July at a seven-year-low of 5.3%, down from a post-crisis peak of 10% in October 2009.
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“The ongoing rise in labor demand still appeared not to have led to a broad-based firming of wage increases”, the minutes said.
