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The Federal Open Market Committee (FOMC) – the policy-setting arm of the Federal Reserve – seems poised to raise interest rates next month based on minutes released from the committee's meeting earlier this month. NAFCU Chief Economist and Vice President of Research Curt Long said such a move is already widely anticipated.

"While FOMC participants opted unanimously to hold interest rates steady in May, the minutes from the meeting showed a strong leaning toward raising rates next month," said NAFCU Chief Economist and Vice President of Research Curt Long. "This will not be a surprise to financial markets, which were largely anticipating such a move. The minutes also address the recent strengthening of inflation. The emphasis on a 'symmetric' inflation goal suggests that after years of falling short of its 2 percent goal, the committee may be willing to accept a modest overshoot."

Overall, committee members agreed in May that the labor market is strengthening and economic activity rising.

Regarding inflation, a few committee members said it is possible for it to move slightly above the FOMC's 2 percent objective. The minutes explained that a "temporary period of inflation modestly above 2 percent would be consistent with the Committee’s symmetric inflation objective and could be helpful in anchoring longer-run inflation expectations at a level consistent with that objective."

The committee last raised the federal funds target rate to the current range of 1.5 to 1.75 percent – a level last seen in 2008 – at the end of its March meeting. The median rate forecast for 2018 released in March called for three hikes overall, but many committee participants expected four or more rate hikes this year.

The FOMC will meet again June 12-13, which will also include economic projections and a statement from Fed Chair Jerome Powell.