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Minutes from the Oct. 29 meeting of the Federal Open Market Committee show committee members face a dilemma regarding future interest rate increases due to competing trends in the labor market and inflation.

According to NAFCU Chief Economist and Director of Research Curt Long, the committee sees the domestic economy as being on the right track overall – but members noted that inflation is below their target level and expressed concerns about weakness in foreign markets.

"The FOMC minutes reveal the uncertainty that the committee faces with regard to future interest rate increases," Long said. "While some slack remains in the labor market, it is diminishing at a pace that would argue for a rate increase at some point next year. However, inflation is still well below the committee's target, and foreign weakness could push it lower still. Unless some progress is seen on that front, it seems likely that at the very least future rate increases will be gradual."

During the October meeting, the FOMC announced the end of the Federal Reserve's asset purchase program.

The committee members noted that markets will react strongly to any change in FOMC language. They discussed adding language to future guidance that would indicate at what pace an interest rate hike would proceed, after it began.

The next FOMC meeting is scheduled for Dec. 16-17.