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Economy

Fed says another rate hike is coming, but future increases get murky

Members of the Federal Reserve Open Market Committee signaled their intention to raise interest rates "fairly soon," but a few participants expressed uncertainty about further hikes, according to minutes released Thursday from its Nov. 7-8 meeting.

Another rate hike is likely next month if economic indicators stay on track, which would mark the fourth increase of 2018. At the November meeting, the Fed kept the target range for the federal funds rate unchanged at 2% to 2.25% after raising it a quarter point in September.

According to the minutes, "almost all" FOMC members expressed the view that another increase would be warranted "fairly soon if incoming information on the labor market and inflation was in line with or stronger than their current expectations." Earlier in the meeting, Fed officials touted as positive signs the strong labor market, low unemployment rate and inflation holding steady around its 2% target.

There were members at the November meeting who were unsure about the timing of future rate increases. "A couple of participants noted that the federal funds rate might currently be near its neutral level and that further increases in the federal funds rate could unduly slow the expansion of economic activity and put downward pressure on inflation and inflation expectations," the minutes said.

The Fed has projected three rate hikes in 2019. When deciding the timing and size of future rate increases, members said they "would take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments," according to the minutes.

Some Fed officials said it would be appropriate to remove the language from its policy statement that references the committee's expectations for "further gradual increases."

"Many participants indicated that it might be appropriate at some upcoming meetings to begin to transition to statement language that placed greater emphasis on the evaluation of incoming data in assessing the economic and policy outlook; such a change would help to convey the committee's flexible approach in responding to changing economic circumstances," the minutes said.