FOMC sees rate hike ahead

Members of the Federal Reserve Open Market Committee expect the central bank's next move will be to raise interest rates, according to minutes from the FOMC's Aug. 5 meeting. “A number of participants worried about the possibility that core inflation might fail to moderate next year unless the stance of monetary policy was tightened sooner than currently anticipated by financial markets,” read the minutes from the meeting, released this afternoon. Additionally, members of the FOMC expressed “significant concerns” that the upside risks to inflation remain, “especially the risk that persistently high headline inflation could result in an unmooring of long-term inflation expectations.” At the August meeting, the Federal Reserve kept the federal funds rate unchanged at 2% for the second time running, citing tight credit conditions, elevated energy prices and a contraction in the housing market as factors that are likely to weigh on economic growth over the next few quarters (InvestmentNews, Aug. 5).