The US Federal Reserve is likely to raise interest rates in June if economic data points to stronger second-quarter growth and firming employment and inflation, minutes from the central bank’s April policy meeting showed.
Most participants in the policy meeting felt that “if incoming data were consistent with economic growth picking up in the second quarter, labor market conditions continuing to strengthen and inflation making progress… then it likely would be appropriate for the [Fed] to increase the target range for the federal funds rate in June”, according to the minutes released Wednesday.
The suggestion that a rate increase in June is firmly on the table suggests the Fed is closer to tightening monetary policy again than Wall Street had expected, Reuters noted.
The Fed lifted rates in December for the first time in nearly a decade.
Recent data has made policymakers more confident that inflation is rising toward the Fed’s 2 percent target, according to the minutes.
Some policymakers at the meeting were worried about a slowdown in US economic growth during the first quarter, when gross domestic product expanded at an annual rate of 0.5 percent, a two-year low.
But others argued that ongoing robust job growth suggested the economy had not gone off the track and that the growth data could be flawed, Reuters reported.
“Most pointed to the steady improvement in the labor market as an indicator that the underlying pace of economic activity had likely not deteriorated,” according to the minutes.
Data since the end of April has pointed to a pickup in consumer spending and manufacturing output, bolstering the view that economic growth was accelerating after stalling in the first quarter.
Several Fed officials in recent weeks have stressed that a rate increase might be warranted in June.
The Fed last month kept its target overnight interest rate in a range of 0.25 percent to 0.50 percent.
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