Newsroom

The Federal Open Market Committee (FOMC) will continue with further gradual increases in the federal funds target rate in order to balance the potential risks of tightening monetary policy too quickly or too slowly, according to its September meeting minutes released Wednesday.

"The minutes from the most recent FOMC meeting show the committee is optimistic about where the economy is and not overly troubled about potential risks," said NAFCU Chief Economist and Vice President of Research Curt Long. "The expectation remains that the once-per-quarter pace of rate hikes will persist through at least mid-2019."

Following the FOMC's Sept. 25-26 meeting, the committee decided to raise the federal funds target rate by a quarter-point to a range of 2 to 2.25 percent. This was the third rate hike this year.

Also of note from the minutes:

• The labor markets continue to strengthen. "For the economy overall, participants generally agreed that, on balance, recent data suggested some acceleration in labor costs, but that wage growth remained moderate by historical standards, which was due in part to tepid productivity growth," the minutes stated.
• Regarding inflation, on a 12-month basis, committee members noted that "both overall inflation and inflation for items other than food and energy remained near 2 percent."
• Committee members said the flooding and damage from Hurricane Florence, which struck the Carolinas on Sept. 14, seemed to have a "modest, transitory effect on national economic growth in the second half of the year."

Future rate hikes will take into account "a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments," the minutes stated.

The FOMC meets again Nov. 7-8 and Dec. 18-19.