Fed Officials Split Over Whether Financial Conditions Are Tight Enough

Federal Reserve policymakers are divided over whether higher Treasury yields have tightened financial conditions enough to restrain inflation, a dispute that may influence the central bank’s next rate move.

Some policymakers point to rising Treasury yields but say stock prices, credit availability and business investment indicate that conditions remain loose. They view the current environment as insufficient to curb inflation. Other policymakers favor waiting for more economic evidence before changing rates.

The Fed is expected to keep its target range at 3.75% to 4.00% Wednesday. Its September rate increase of 25 basis points was unanimous. Investors see the Dec. 8-9 meeting as a possible occasion for another increase.

The debate echoes questions raised in TokenPost’s earlier preview of the September meeting minutes. The Fed is scheduled to announce its decision at 2 p.m. ET (18:00 UTC) Wednesday, Oct. 28, followed by a news conference at 2:30 p.m. ET (18:30 UTC).