The Fed believes that higher economic growth and picked up inflation justifies step-by-step interest rate hikes, as seen from the minutes of recent gathering.
Despite the Federal Open Market Committee’s decision to leave target rate unchanged taken on January 30-31, policymakers stated clearly that going forward rates should be lifted. The news made markets extremely volatile.
Stocks in the beginning surged, then dropped as bond returns leaped, particularly the 10-year Treasury note that reached the mark unseen in four years.
Policymakers consider that upside risks to economic expansion had gone up due to tax reduction, higher consumer expenditure and a whole bunch of indicators showing that the rate of expansion was firm.
Participants said the economic forecasts have been updated upward in comparison to the preceding ones they came up with at the December gathering.
The biggest part of participants said that more solid economic expansion prospects made gradual policy firming seem a proper measure, according to the summary. Nearly all participants expected inflation to rise to the Fed's target of 2% in the mid-term as growth kept higher than trend and the jobs market held robust.