The Fed hiked its benchmark rate a quarter point to a range of 2.25 percent to 2.5 percent, the fourth increase in the year and the ninth since policy normalization began in December 2015.
“With an increase in the target range at this meeting, the federal funds rate would be at or close to the lower end of the range of estimates of the longer-run neutral interest rate, and participants expressed that recent developments, including the volatility in financial markets and the increased concerns about global growth, made the appropriate extent and timing of future policy firming less clear than earlier,” the meeting summary stated.
The indecision was reflected in rate forecasts among individual members. Officials cut their expected moves this year from four to two, citing a range of concerns about growth and volatility in the financial markets.
“Concerns over escalating trade tensions, global growth prospects, and the sustainability of corporate earnings growth were among the factors that appeared to contribute to a significant drop in U.S. equity prices,” the minutes said.
The misgivings about future policy came before recent public statements from Fed officials echoing a softening course.
Fed Chairman Jerome Powell, in remarks on Friday while seated next to his predecessors Janet Yellen and Ben Bernanke, said policymakers will be “patient” when approaching policy decisions. As reflected in the minutes, sentiment among Fed officials is that the economy remains strong, but they’re attuned to downside risks that the market perceives.
Among those cited most prominently were “the possibilities of a sharper-than-expected slowdown in global economic growth, a more rapid waning of fiscal stimulus, an escalation in trade tensions, a further tightening of financial conditions, or greater-than-anticipated negative effects from the monetary policy tightening to date.”