FOMC Weighed Rate Hike in February

Federal Reserve policymakers in February considered--but rejected--the idea of taking back at least one of the quarter-point interest-rate cuts they engineered last fall, according to minutes of their meeting. In three steps from late September to mid-November, the Fed reduced the benchmark rate on overnight loans between banks from 5.5% to 4.75% to prevent the world market turmoil that followed the collapse of the Russian ruble from harming the U.S. economy. In a meeting on Feb. 3, members of the Federal Open Market Committee noted that “the market unsettlement that had in large measure prompted the committee’s easing actions during the fall had now lessened appreciably.” One FOMC member--the minutes did not reveal who--argued the Fed should adopt a policy directive declaring higher rates were more likely than lower rates in the future. But, in the end, all accepted a directive giving equal weight to the possibility of a rate cut or rate increase.