U.S. Federal Reserve officials are open to an interest rate hike in June, if the economy continues to improve, minutes of the Fed's latest monetary policy meeting showed Wednesday.
"Most participants judged that if incoming data were consistent with economic growth picking up in the second quarter, labor market conditions continuing to strengthen, and inflation making progress toward the Committee's 2 percent objective, then it likely would be appropriate for the (Federal Open Market) Committee to increase the target range for the federal funds rate in June," according to the minutes of the Fed's April 26-27 meeting released Wednesday.
The Fed raised its target range for the federal funds rate by 25 basis points to 0.25-0.5 percent in December last year, the first rate hike in nearly a decade. But the turmoil in financial markets and a slowdown in global economy since the start of the year have raised concerns about the strength of the U.S. economy, forcing Fed policymakers to hold off on any further rate hikes since then.
Policymakers downplayed the slowing growth in the first quarter, when the gross domestic product increased at a two-year-low of 0. 5 percent, and said the softness in spending in the first quarter was unlikely to persist. They agreed that risks to the U.S. economic outlook posed by global economic and financial developments have receded, but noted that developments abroad still warranted close monitoring.
After a chill start of this year, recent economic data pointed to a possible rebound in growth in the second quarter of this year. The industrial production in April surged at the fastest pace in more than a year; consumer spending and housing data also indicated signs of growth in the second quarter.
Economists are expecting the U.S. economic growth to rebound to about 2 percent in the second quarter.
Several Fed officials, including Atlanta Fed President Dennis Lockhart and San Francisco Fed President John Williams, express their concerns in recent days that the market might underestimate the chances of a rate hike in June.
They noted that at least two rate hikes in this year were reasonable, and said that the market was pessimistic about the outlook of the U.S. economy.
Latest comments