US Fed officials divided on rate hike

NEW YORK (AA) – Federal Open Market Committee (FOMC) officials were divided last month on the Federal Reserve's interest rate increase decision, minutes from the group’s meeting showed Wednesday.

FOMC officials voted 9 - 1 to hold the Fed's benchmark interest rate steady at the meeting that ended July 27.

"The majority believed it was prudent to accumulate more data in order to gauge the underlying momentum in the labor market and economic activity," the minutes read.

While a couple of the FOMC members wanted to wait for more evidence showing inflation would reach the Fed's target of 2 percent, one member wanted to raise interest rate at the July meeting.

Some other members said they expect "economic conditions would soon warrant taking another step in removing policy accommodation."

The FOMC noted that the rate hike would depend on incoming data that will shape the overall economic outlook, but also highlighted improvements in the domestic economy such as strong job gains in June after weak growth in May.

Although the risks toward the U.K.'s vote to leave the EU, known as the Brexit, seemed a lesser concern for the Fed, the FOMC said it would continue to "closely monitor economic and financial developments abroad."

Many analysts were expecting the Fed to have a more hawkish tone in the meeting after the bank added new language in a statement July 27 that said "Near-term risks to the economy have diminished."

New York Fed President William Dudley also had a hawkish tone Tuesday when he said "it is possible" in reference a rate hike in September, adding, "We are edging closer towards the point in time when it will be appropriate to raise rates further."

But with the dovish language in the minutes, the U.S. dollar began to fall and Wall Street shook off the bearish sentiment as the Dow and the S&P 500 indexes climbed to positive territory.

The FOMC's next meeting will be held on Sept. 20-21.