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Inflation still holding rates down, Fed minutes show

Federal Reserve Chairwoman Janet Yellen
Federal Reserve Chairwoman Janet Yellen

Members of the Federal Open Market Committee felt that "some patience in removing policy accommodation" was warranted while they continue to track inflation trends before deciding on further rate hikes, according to minutes of the Sept. 19-20 meeting released Wednesday.

That meeting saw no further hikes in the federal funds rate, but did announce a gradual unwinding of the Federal Reserve's $4.5 trillion balance sheet starting in October. The market impact should be limited, FOMC members felt, because market participants were well aware of its coming.

"Participants raised a number of important considerations about the implications of persistently low inflation for the path of the federal funds rate over the medium run. Several expressed concern that the persistence of low rates of inflation might imply that the underlying trend was running below 2%, risking a decline in inflation expectations," the minutes said.

"It was also noted that the persistence of low inflation might result in the federal funds rate staying uncomfortably close to its effective lower bound."