FOMC Minutes: Fed officials split on rates path given uncertain outlook

Fed officials were split on the path of future rates amid uncertainty regarding the labor market, growth, risks to the economy and inflation.

At June’s meeting, Fed officials agreed that it was "prudent to wait for additional data regarding labor market conditions as well as information that would allow them to assess the consequences of the U.K. vote for global financial conditions and the U.S. economic outlook.” The meeting Fed took place 8 days before the Brexit vote.

Overall, Fed officials left options open after June meeting. However, investors believe the chances for a July rate hike are minimal following UK decision to leave the European Union and slowing employment growth.

“Most participants judged that, in the absence of significant economic or financial shocks, raising the target rate for the federal funds rate would be appropriate if incoming information confirmed that economic growth had picked up, that job gains were continuing at a pace sufficient to sustain progress toward the Committee’s maximum-employment objective, and that inflation was likely to rise to 2% over the medium term,” the minutes of the June 14-15 meeting said.

However, officials disagreed in other issues as some members emphasized that, with labor market conditions and inflation at or close to the Fed’s objectives, “taking another step in removing monetary accommodation should not be delayed too long”. However, a couple of members underscored that they would need to "accumulate sufficient evidence to increase their confidence that economic growth was strong enough to withstand a possible downward shock to demand and that inflation was moving closer to 2 percent on a sustained basis.”