More interest-rate increases may be necessary because inflation has been somewhat higher than acceptable, members of the Federal Reserve said at Alan Greenspan’s last interest-rate meeting, according to minutes released today.
At that meeting, held Jan. 31, the Federal Open Market Committee (FOMC) raised its target for the federal funds interest rate to 4.5 percent.
The decision marked the 14th straight time the Fed raised interest rates over the last 19 months. The meeting in which the decision was made was the last for Fed head Alan Greenspan, the chairman of the committee. Ben Bernanke has since replaced Greenspan.
“In the view of some members, the possibility of additional policy moves was reinforced by readings on core inflation and inflation expectations that were somewhat higher than was desirable over the long run,” the minutes of the FOMC, released today in Washington, read.
“However, all members agreed that the future path for the funds rate would depend increasingly on economic developments and could no longer be prejudged with the previous degree of confidence,” the minutes concluded.
As the housing market cools and interest rates inch up, real estate professionals have watched the Fed for signs that the rate raises will come to a halt. Interest rates are considering one of the most important considerations as to whether consumers can afford to buy homes.
Though the Fed’s decisions only govern the interest rate banks charge other banks for overnight loans, generally the federal funds rate affects long-term interest rates, such as mortgage loans, as well.
Many industry experts have expressed concern that if long-term interest rates went too high, the market would be impacted.
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