Date
22 January 2017
The Fed, led by its chairwoman Janet Yellen, is yet to be convinced that inflation is on its way to the 2% target. Photo: Bloomberg
The Fed, led by its chairwoman Janet Yellen, is yet to be convinced that inflation is on its way to the 2% target. Photo: Bloomberg

Inflation doubts prompted Fed to hold its fire, minutes show

Concern that inflation could remain stuck at exceptionally low levels was the reason why US Federal Reserve officials decided to hold off on a rate hike at their policy meeting last month, according to minutes released Thursday.

The meeting minutes showed that policy makers weren’t convinced that inflation was on its way back to their 2 percent target after undershooting it for more than three years, the Wall Street Journal reported.

Officials had signaled in midsummer they could move in September to lift their benchmark interest-rate from near zero, where it has been since December 2008.

They held their fire at the September meeting but have since said they still expect to act before the year-end. 

As Fed Chairwoman Janet Yellen emphasized in a press conference following the meeting, turbulence in financial markets and economies abroad weighed heavily on the decision to keep rates near zero.

Officials worried that “recent global economic and financial developments had imparted some restraint to the economic outlook and placed further downward pressure on inflation in the near term,” according to the minutes.

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RC

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