US Federal Reserve officials remain divided over whether to raise interest rate again

Federal Reserve policymakers see 2019 marking the end of their balance sheet run-off, but not necessarily their interest-rate increases.

Minutes of the central bank’s January 29-30 policy meeting released on Wednesday showed “almost all participants” agreeing it best to halt roll-offs this year, a move that should be welcomed by investors worried the balance sheet draw-down is hurting the economy.

The news on interest rates was less friendly to financial markets, where some investors think the next move in interest rates might be down. Minutes, instead, showed Fed officials were divided over what it would take for them to raise rates again. There was no suggestion of a cut.

“The debate is still focused on whether to tighten or not, and not whether to cut,“ said Wrightson ICAP chief economist Lou Crandall. “The risk is tilted in the direction of more tightening.”

While US stocks edged higher after the release, the 10-year Treasury yield climbed to 2.64 per cent and the dollar erased losses.

Fed officials dedicated a large portion of their discussion to concerns over risks facing the US economy, ranging from slower growth in China and Europe and waning fiscal stimulus, to ongoing trade disputes and the complications from the UK exit from the European Union.