Fed minutes: Strong economy supports rate hikes

Screenshot  FOX Business

At 0640 GMT the rand was 0.26% weaker at R14.2900 per dollar, having risen to R14.1050, its best since 1 October, as the NY session kicked off before the release of the Fed minutes breathed life back into the greenback rally.

The discussion, revealed in minutes of the September 25-26 meeting released Wednesday, shows that a few participants believed that the Fed's key interest rate would need to "become modestly restrictive for a time" to guard against inflation climbing too high.

The US Federal Reserve has signalled there will be another rise in interest rates this year, despite opposition from the White House and growing concerns about the impact on emerging market economies.

Speaking on Fox News on 16 October he said: "The Fed is raising rates too fast". "I'm not happy with what he's doing because it's going too fast", Trump said.

Further rate hikes "would most likely be consistent" with the current period of firming inflation and historically low unemployment, according to the minutes released Wednesday.

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"My biggest threat is the Fed", he said, according to excerpts released before the interview with "Trish Regan Primetime" airs. At that point, the policy rate would be at 3.4 percent, according to the median of Fed officials' individual forecasts.

Furthermore, "some" at the meeting said that risks grew as the U.S. economy increasingly outpaces its rivals' more sluggish growth "because of the potential for further strengthening of the dollar". The display of unanimity could bolster expectations the central bank will raise rates a fourth time this year in December.

The meeting took place three weeks ago - before last week's global market meltdown that saw stocks and bond prices hit sharply amid jitters over rising USA rates and the United States trade war with China.

In February, Trump tapped Powell, then a member of the Fed's board, to become chairman after he had decided not to offer Yellen a second four-year term. Trump denied having direct contact with Powell since nominating him.

The Fed has been raising interest rates since 2015 and after the rate hike last month it stopped describing the stance of monetary policy as "accommodative", meaning that it no longer thought the level of interest rates was stimulating the economy. But the courts ruled in a case decades ago involving the Federal Trade Commission that this language has to involve more than a policy disagreement between the president and the Fed.

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