Here come the Fed minutes

"We're starting to catch some whiffs of inflation, a bit of a bump on the wage front, and the Fed is using that as a backdrop to get rates to more of a normal level".

While some see the possibility of rapid inflation, others see "little solid evidence" of inflation or wage pressures, the minutes said.

Speaking at a monetary policy symposium in Tokyo Thursday, Mr. Quarles said current Fed policy "remains accommodative".

After holding its benchmark federal-funds rate near zero for seven years, the Fed has raised it five times since late 2015 to a range between 1.25% and 1.5%. The minutes, which some investors saw as striking a more hawkish tone than they had expected, renewed concerns that a pickup in inflation could push the central bank to pick up its pace of interest-rate increases - something that some investors said had contributed to a wave of selling across global markets earlier in February. Higher bond yields indicate investors expect more risk of inflation.

"(The minutes) show that officials were firmly on track to raise interest rates again in March", Paul Ashworth, chief economist at Capital Economics, said in a note.

At the 30-31 January meeting, the last under former Fed chair Janet Yellen, the Federal Open Market Committee did as expected and left interest rates unchanged.

Paul Ashworth, chief USA economist at Capital Economics, said he is forecasting four Fed rate hikes this year on the basis of his expectations that inflation will finally rebound this year and the decisions by Congress to cut taxes and boost spending will increase economic growth.

Most Fed officials predict that stronger growth will ultimately translate into stronger inflation, but they have made the same predictions repeatedly in recent years, without notable success.

Confidence in the dollar has also been shaken by mounting worries over the U.S. budget deficit.

The yield on the two-year Treasury note was at 2.270, after hitting a nine-year high of 2.282 earlier in the day.

Shortly after Fed officials met, stocks suffered a 10% decline.

But they reversed course later as bond yields climbed to four-year highs on the likelihood of further rate increases this year. The discount store operator aims to achieve sales of 1.9 trillion won ($1.8 billion) from its warehouse-style stores this year as it attempts to revitalize offline shopping outlets, Yonhap News Agency reported.

Some officials argue that the Fed should stop raising rates until inflation shows clear signs of revival.

Wall Street was a tad negative overnight, after being nicely positive for six days straight following the 10% slump in stocks a couple of weeks ago.

Quarles, who was named to the central bank's board by President Donald J. Trump, said recently enacted tax changes and bipartisan budget deals could help sustain the economy's expansion by increasing demand and spurring business investment.

  • Zachary Reyes