WASHINGTON (AP) -- Federal Reserve officials generally believe that it'll soon be time for another increase in the Fed's key interest rate. However, a few felt any further rate hikes should be delayed until they see inflation moving higher, minutes of their last meeting revealed.
Minutes of the Fed's Oct. 31-Nov. 1 meeting released Wednesday showed that many officials believed a third rate hike this year will likely be warranted if incoming data leave the medium-term economic outlook unchanged. But "a few" officials remained worried that inflation has failed to accelerate toward the Fed's 2 percent goal as expected. They suggest that the central bank needs to remain cautious in pushing rates higher.
The Fed meets again on Dec. 12-13, and private economists widely expect it will go ahead and raise rates.
"A December rate hike is still the most likely outcome," said Paul Ashworth, chief U.S. economist at Capital Economics. Ashworth said the minutes did show that Fed officials are still struggling to solve the mystery of why wage growth and underlying price inflation have remained so low with an unemployment falling so low.
The minutes showed there is still a division between those who are worried the Fed might be moving too slowly amid low unemployment and those still concerned that inflation is falling short of expectations.
The central bank has raised rates twice so far this year, in March and June, pushing its benchmark rate to a still-low level of 1 to 1.25 percent. But at three meetings since then, the Fed has left rates unchanged as officials debated the future course of inflation.
The Fed's goal is to manage the economy to promote maximum employment and stable prices, which it defines as inflation rising at an annual rate of 2 percent.
For much of this year, inflation has been falling farther from the Fed's goal. While Fed officials at first blamed temporary factors such as a price war among cellphone providers, the persistence of very low inflation has raised concerns that something more fundamental might be taking place.
The Fed wants to keep inflation moving in what it considers an optimal level of around 2 percent, which it believes signifies price stability. Inflation lower than that is seen as a sign of economic weakness.
In remarks at New York University Tuesday night, Fed Chair Janet Yellen said that she and her colleagues are still concerned about the failure of inflation to make more progress moving toward the 2 percent goal. She called this "surprising" since the country is essentially at full employment, with the jobless rate falling in October to 4.1 percent, the lowest level in nearly 17 years.
"It may be that there is something more endemic or long-lasting here that we need to pay attention to," she said.
Yellen will likely expand further on her views when she testifies next Wednesday on the economy before the congressional Joint Economic Committee.
The Fed voted 9-0 to keep its key rate unchanged at the meeting three weeks ago. In September, however, it issued quarterly projections that showed officials are still looking for a third rate hike this year.
The minutes did not reveal any discussion among Fed officials at the last meeting over impending leadership changes at the central bank. President Donald Trump on Nov. 2 announced that he had chosen Fed board member Jerome Powell to replace Yellen as Fed chair.
Yellen, the first Fed leader in nearly four decades not to be offered a second term, announced on Monday that she will leave the Fed board when Powell is confirmed by the Senate as her replacement. While her term as chair ends on Feb. 3, her term on the seven-member Fed board would not have expired until January 2024.