Minutes May Show Why Fed Kept Timing Vague on Next Rate Increase

When Federal Reserve policy makers met in late July, a brighter picture of the U.S. labor market had emerged, and the U.K. vote to leave the European Union passed without much damage in financial markets.

The most notable change to the Federal Open Market Committee’s statement after the July 26-27 gathering was a reassuring observation that “near-term risks to the economic outlook have diminished.” Still, a warning of a looming interest-rate increase wasn’t delivered.

Minutes of that meeting, to be released Wednesday, may help explain why Fed officials stood pat without signaling the timing of their next move. While the short-term picture looked rosier, mounting uncertainties about longer-run issues such as slower potential growth — discussed at length at the FOMC meeting in June — may have continued to temper the urge to tighten.

Bloomberg

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