2018.10.1714:30:00UTC+00Fed Continues To Favor "Gradual Approach" To Raising Rates

Amid recent concerns the Federal Reserve may raise interest rates more aggressively than currently anticipated, the minutes of the central bank's September monetary policy meeting showed members continue to favor a "gradual approach" to hiking rates.

The assessment that the "gradual approach" remains appropriate comes as the meeting participants generally judged that the economy was evolving about as anticipated.

The Fed argued the "gradual approach" would balance the risk of raising rates too quickly, causing a slowdown in the economy, and raising rates too slowly, leading to inflation above the central bank's 2 percent objective.

Looking ahead, the minutes said a few meeting participants expected rates would need to become modestly restrictive for a time.

A number of participants also determined it would be necessary to temporarily raise rates above the longer-run level in order to reduce the risk of a sustained overshooting of the Fed's inflation target.

Meanwhile, a couple of participants indicated they would not favor adopting a restrictive policy stance in the absence of clear signs of an overheating economy and rising inflation.

The minutes also said members judged that information received since the last Fed meeting in August indicated that the labor market had continued to strengthen and that economic activity had been rising at a strong rate.

Both overall inflation and core inflation remained near 2 percent, while indicators of longer-term inflation expectations were little changed on balance, the minutes said.

The Fed added that members continued to believe that the risks to the economic outlook remained roughly balanced.

During the meeting, the Fed decided to raise rates by a quarter point for a third time this year to 2 to 2.25 percent and forecast another rate hike before the end of the year. The central bank's forecasts also pointed to three rate hikes in 2019.

The Fed's assessment that the "gradual approach" to raising rates remains appropriate comes even as President Donald Trump has repeatedly attacked the central bank for hiking rates too quickly.

Trump continued his assault on the Fed in an interview with Fox Business on Tuesday, calling the central bank the "biggest threat" to his presidency.

"My biggest threat is the Fed," Trump said during an interview with Fox Business' Trish Regan. "Because the Fed is raising rates too fast."

Noting the central bank's independence, Trump said he has not spoken to Fed Chairman Jerome Powell but added, "I'm not happy with what he's doing."