Fed officials talked about hiking rates to 'restrictive' level
WASHINGTON — Federal Reserve officials last month debated how high they should raise interest rates to achieve economic goals, with some arguing that they might need to lift rates to a level that would modestly restrain growth.
In the end, the Fed modestly raised its key short-term rate and predicted that it would continue to gradually tighten credit to manage growth and inflation amid a steadily healthy job market and economy.
The discussion, revealed Wednesday in minutes of the Fed’s Sept. 25-26 policy meeting, showed that a few participants thought the Fed’s key rate would need to “become modestly restrictive for a time” to prevent inflation from climbing too high. Other officials said they would oppose a restrictive rate policy without clear signs of an overheating economy and rising inflation.
The minutes did not indicate that officials reached a conclusion. But they did show that all Fed officials favored gradual rate increases. Economists said that the minutes supported the widespread view that the Fed is going to keep slowly raising rates in response to strong growth.
“Overall, nothing here to change our view,” said Paul Ashworth, chief U.S. economist at Capital Economics.
Many economists say they think growth will start to slow next year as the effects of tax cuts and increased government spending begin to wane.
After the Fed raised its key policy rate at last month’s meeting, the action was immediately assailed by President Donald Trump as a risk to the economy’s continued strength.
