Based on the minutes from the Federal Reserve’s October meeting, the possibility of a December rate hike was something that a majority of the Federal Reserve officials were open to considering. This meeting signaled that the Fed officials would consider an interest rate hike in their upcoming December 15-16 meeting. Federal Reserve Board Chairwoman, Janet Yellen, has admitted that a December rate hike is quite possible. Many Fed officials felt that the economic conditions would be such by the next meeting that raising interest rates could be an option according to the minutes released today by the Federal Open Market Committee.
This was the first time that Fed officials indicated that they would contemplate an interest rate hike in their upcoming December meeting. While downplaying an interest increase as automatic, they did say it would take “weak data” for there to be a change of course.
Those in favor of the December move had several reasons for a rate hike:
- A further delay in raising interest rates would make financial markets more anxious and send a signal of lack of confidence in the economy.
- Financial imbalance buildup was an additional concern.
- Hiking rates sooner than later would cause repercussions to be less than by waiting.
While 3rd quarter GDP had slowed, Fed official believe that a “solid underlying momentum” is growing in both business and consumer demand.