Fed minutes: Officials in June wanted more evidence of strength before rate

But while a decline in labor market slack, an unemployment rate headed below 5 percent next year, and expected GDP growth of 2.75 percent for the next couple of quarters bodes well for the US economy, he said, low inflation remains a chief worry.

The Federal Reserve is anxious about Greece hurting the USA economy.

Federal Reserve policymakers last month voiced concerns about the possible effects of the Greek financial crisis on the USA economy and warned against a premature hike in interest rates, according to minutes of the Fed’s June 16-17 meeting.

Fed officials last month were divided on precisely when to begin raising rates, according to estimates released immediately after the June meeting. But the world has changed a great deal in the past three weeks, with Greece on the precipice of running out of money and hope, and China’s mom-and-pop investors nursing losses of more than 30% amid a scary stock market plunge.

Some pointed to the risk that the weaker-than-anticipated rise in economic activity over the first half of the year could reflect factors that might continue to restrain sales and production, and that economic activity might not have sufficient momentum to sustain progress towards the Committee’s objectives.

Fed Chair Janet Yellen will offer an updated view on the bank’s outlook on Greece in a speech on Friday.

The meeting summary doesn’t provide further signals of when the Fed is likely to increase its benchmark interest rate for the first time since 2006. However, not raising rates will leave the Fed “zero bound” if another recession should occur.

Notably, given recent events, at that point some Fed officials were “concerned” about Greece and China. But the Fed indicated it was on track for at least one and perhaps a second rate increase later this year.

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“Members thus saw economic conditions as continuing to approach those consistent with warranting a start to the normalization of the stance of monetary policy”, the minutes said. Translation: A September rate hike is still an option.