Newspaper article International New York Times

Fed Officials Signal They Are Prepared to Raise Rates ; Economy Healthy Enough to Handle Gradual Move, U.S. Policy Makers Say

Newspaper article International New York Times

Fed Officials Signal They Are Prepared to Raise Rates ; Economy Healthy Enough to Handle Gradual Move, U.S. Policy Makers Say

Article excerpt

Most Fed officials say they think the economy will be ready for higher interest rates by the end of the year, the central bank disclosed.

The Federal Reserve, setting aside its habitual reticence, is issuing increasingly explicit warnings that it is likely to start raising its benchmark interest rate in December.

Most Fed officials say they think the economy will be ready for higher rates by year's end, the Fed revealed on Wednesday in an official account of its October policy-making meeting.

"While no decision had been made, it may well become appropriate to initiate the normalization process at the next meeting," the October meeting minutes said.

On Thursday, the European Central Bank revealed that top officials had debated expanding monetary stimulus for the eurozone at their last meeting before deciding to hold off on any changes until December, The Associated Press reported from Frankfurt.

The written account of the Oct. 22 meeting shows the bank's governing council remains worried about persistent low inflation and the impact on Europe of the economic slowdown in China and other emerging markets, A.P. said.

The account says that "the view was put forward" that a case for more action could be made "already at the current meeting," according to A.P.

The account of the Fed meeting cautioned that the central bank might still be deterred by "unanticipated shocks" or disappointing economic data, but such warnings sound increasingly pro forma. After the strong October jobs report, analysts are convinced that a rate increase is imminent.

"I am comfortable with moving off zero soon, conditioned on no marked deterioration in economic conditions," Dennis P. Lockhart, the Federal Reserve Bank of Atlanta president, said on Wednesday at a conference in New York.

The Fed has held short-term interest rates near zero since December 2008 as the major element in its campaign to stimulate growth by encouraging borrowing and risk-taking. …

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