By Hazel Bradford, Crain News Service
WASHINGTON (Jan. 7, 2016) — While all members of the Federal Open Market Committee (FOMC) agreed Dec. 16 to raise the federal funds rate by 25 basis points, the path going forward is less clear, according to minutes of the meeting, which were released Jan. 6.
For some members, the rate hike was “a close call,” and they emphasized the need to avoid appearing to commit to any specific pace of adjustments. The median projection among FOMC members of a rate of 1.4 percent by the end of 2016 stayed the same. However, the median for later years declined slightly from previous meetings, to 2.4 percent by the end of 2017, and 3.3 percent at the end of 2018, over expectations of persistent economic headwinds and a gradual rise in inflation.
“Participants cited a number of lingering concerns, including the possibility that further dollar appreciation and persistent weakness in commodity prices could increase the stress on emerging market economies and that China could find it difficult to navigate the cyclical and structural changes underway in its economy. Several upside risks to the U.S. outlook also were noted, including the possibility that declining energy prices could spur consumer spending more than currently anticipated,” the FOMC minutes said.