Markets Right Now: Stocks closing higher on Wall Street

Economists see the December meeting as the most likely time for a rate increase since it follows the US presidential election, according to a Reuters poll last week.

The case for increasing rates sooner rather than later was helped along by two strong monthly job gains, along with a job market that has regularly seen gains of 150,000 a month since the recession.

The minutes from the July meeting showed policy makers believed risks to the United States economy had lessened but wanted to keep their interest rate policy “options open”.

Don’t count out a rate hike from the Federal Reserve this year yet. But many think the Fed will lack enough certainty to act, especially if inflation remains far below the Fed’s target. “While a growing number of policymakers likely wouldn’t oppose lifting rates at the next meeting, the majority still seem keen to wait until the economy strengthens further and downside risks abate”.

“Members generally agreed that, before taking another step in removing monetary accommodation, it was prudent to accumulate more data in order to gauge the underlying momentum in the labor market and economic activity”, according to the minutes released in Washington on Wednesday.

The Fed said it was encouraged by a rebound in job growth and also pointed out that financial markets have been stable following a bout of turbulence triggered by Britain’s June 23 vote to leave the European Union. Dudley said he thought that solid job growth would continue and that the sluggish pace of the USA economy would pick up. Interest rate futures implied traders saw a 50 percent chance the Fed would raise rates at its December 13-14 policy meeting, versus 52 percent on Tuesday, according to CME Group’s FedWatch program. The Fed can’t directly increase productivity growth, which comes from companies finding new ways to produce more goods and services with the same of workers. A few were even pushing for a July rate hike.

USA stocks are trading lower Wednesday as the market inches away from its recent record highs.

Fed officials have also expressed concern about the tepid pace of US growth, weakness in worker productivity, excessively low inflation and the long-term consequences of Britain’s vote in June to leave the European Union.

“All of this suggests that there may be little guidance from the minutes about the direction that the Fed is likely to take in the near term”.

Investors expect more insight on the rate outlook at an annual meeting of central bankers from around the world in Jackson Hole, Wyoming, next week.

These market moves were reinforced by the Fed Fund futures market, which showed an implied probability of a September rate hike at 24% immediately prior to the release of the minutes, followed by a plunge down to 12% in the immediate aftermath.

But Fed officials also noted the risks of waiting too long.