World Economy

Fed Says Rate Hike Soon

Fed Says Rate Hike SoonFed Says Rate Hike Soon

US central bankers say it will “soon” be time to raise the key lending rate again, according to minutes from the last Federal Reserve meeting released late Wednesday.

Monetary policymakers say they may wait, however, to see if weak growth recorded earlier this year was only temporary, which seems to open the possibility that the next rate increase could be delayed until after next month, AFP reported.

Fed officials said planned spending by President Donald Trump’s administration could boost the economy more than currently forecast, although details and timing of the projects “remain highly uncertain”.

Some central bankers also “expressed concerns” over the administration’s plans to ease bank regulations, which “could increase risks to financial stability”, according to the minutes.

At the meeting from May 2 to 3, the Fed’s policy-setting Federal Open Market Committee voted unanimously to keep the federal funds rate in a range of 0.75% to 1%, just as most analysts had expected, and downplayed the tepid gross domestic product growth in the first quarter as mostly due to “transitory factors”.

Assuming the economy continues to perform as expected, with continued job and wage growth leading to a rebound in consumer spending and business investment, “most participants judged... it would soon be appropriate” to raise rates again, the minutes stated.

The central bank raised rates in March and December, amid a wave of optimism in the early days of Trump’s term with his promises of tax cuts, deregulation and big infrastructure spending.

Most analysts expect two more rate increases this year, likely at the next meeting from June 13 to 14, and again in September. However, the minutes surprisingly cast some doubt on that schedule.

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