A “gradual pace” of rate increases is seen by the Federal Open Market Committee even as risks around fiscal and economic policies heighten, according to minutes from the December meeting, where the key lending rate was lifted for the first time in a year.
“Uncertainty regarding fiscal and other economic policies had increased,” the FOMC members said, according to the minutes released on Wednesday. “Participants agreed that it was too early to know what changes in these policies would be implemented and how such changes might alter the economic outlook.”
The Federal Reserve’s monetary policy-setting body decided to raise the rate by 25 basis points to a range of 0.5% to 0.75% after the Dec. 13-14 meeting, noting that the US labor market had strengthened and economic activity was expanding.
But the uncertainty comes as President-elect Donald Trump prepares to be sworn into office later this month. While his election led to record rallies in equities on hopes for lower corporate taxes, massive infrastructure spending and pro-growth policies, how much the leader is able to accomplish remains to be seen. Trump’s election victory isn’t specifically mentioned in the FOMC minutes.