Rate Rise: Rates Move and Signal Caution

rate rise: Despite signs of a stronger appetite for a rate rise, the minutes also signal caution and division among members about the actual timing on a rates move. "It was noted that a reasonable argument could be made either for an increase at this meeting or for waiting for some additional information on the labour market and inflation," the minutes say. "A couple of members emphasised that a cautious approach to removing accommodation was warranted." The minutes show three voting members on the Fed rate-setting committee dissented on the September policy in favour of an immediate hike when rates were left at between 0.25 and 0.5 per cent, according to Australian Broadcasting Corporation. There is concern that "without gradual increases in the target range" a tighter labour market could result in "a subsequent sharp tightening .. that could shorten the economic expansion." There also appears to be jitters that inflation remains below the Federal Reserve 2 per cent target with voting members noting "there were few signs of emerging inflationary pressures." Wall Street stocks ended 0.1 per cent higher after the Federal Reserve minutes were released despite initial analysis showing little new information in the Federal Reserve rates thinking. Related Story: Interest rates will stay 'very low for a long time', says leading economist Map: United States The likelihood of the first US interest rate rise in a year has slightly strengthened after a number of Federal Reserve voting members said a hike would be justified "relatively soon". With markets factoring in as much as a 70 per cent chance of a December rate hike, several members noted higher rates would be warranted if the US economy continues to strengthen. "Several members judged that it would be appropriate to increase the target range for the federal funds rate relatively soon if economic developments unfolded … as expected," according to the minutes from the Fed September policy meeting. The US dollar was slightly higher on the continued speculation that the reserve will push the rates button in December. Follow Peter Ryan on Twitter @peter_f_ryan and on his Main Street blog. banking, united-states First posted October 13, 2016 07:35:16 noindex The Federal Reserve board next meets on November 1 but a rate rise is seen unlikely a week out from the US presidential election. (news.financializer.com). As reported in the news.