In October, Fed Expected Rate Hike

Federal Reserve policymakers in October anticipated they might need to raise interest rates this month to cool the booming U.S. economy, but they decided there was no immediate need to do so at their Oct. 5 meeting, according to minutes of the meeting released Thursday.

Members of the Federal Open Market Committee believed that a faster-than-expected economic revival abroad plus rising cost pressures at home had set the stage for higher inflation but that it was not yet at a dangerous level, the minutes revealed.

“Members saw little risk of a surge in inflation over coming months, though some pickup from the current subdued level of core price inflation was a distinct possibility,” the minutes said.

While policymakers decided the risk of postponing a rate rise was small, “they believed that the committee probably would need to move to a less accommodative policy stance in the relatively near future, possibly at the November meeting.”

The minutes of each FOMC meeting are traditionally released after its following meeting. At its meeting Tuesday, the Fed raised two key short-term interest rates by a quarter of a percentage point, a move foreshadowed by its unanimous decision in October to adopt a so-called bias toward tighter policy.

At their October meeting, policymakers also cited uncertainty that productivity gains would continue to offset rising wages and prices.