Investing.com – Most Federal Reserve policymakers supported the notion of a gradual approach to raising interest rates while agreeing that inflation developments should be monitored closely, according to the minutes of the Fed's last policy meeting on Dec. 12 – Dec. 13 released on Wednesday.
“Most participants reiterated their support for continuing a gradual approach to raising the target range, noting that this approach helped to balance risks to the outlook for economic activity and inflation," the Fed said in the minutes.
The Federal Reserve appeared to be optimistic on the future outlook for economic growth, noting that recent data suggested that economic activity had been rising at a "solid rate" and that the labor market had continued to strengthen while transitory factors that weighed on inflation in 2017 is expected to subside.
"Real economic activity appeared to be growing at a solid pace, buttressed by gains in consumer and business spending, supportive financial conditions, and an improving global economy," the Fed said in the minutes. "Core PCE prices were forecast to rise faster in 2018, reflecting the expected waning of transitory factors that held down those prices in 2017."
The central bank also cited the possibility of a steeper path of rate hikes should fiscal stimulus boost output beyond its maximum sustainable level.
"Participants discussed several risks that, if realized, could necessitate a steeper path of increases in the target range; these risks included the possibility that inflation pressures could build unduly if output expanded well beyond its maximum sustainable level, perhaps owing to fiscal stimulus or accommodative financial market conditions," the minutes stated.