The Federal Reserve released the minutes of its Sept. 15-16 policy meeting on Oct. 7. They show the Federal Open Market Committee raised the target range for the federal funds rate to 3-3/4 to 4 percent. The record lists no votes against the action, with twelve members voting for it and none against.
Alongside the decision, the Board of Governors voted unanimously to raise the interest rate paid on reserve balances to 3.90 percent and the primary credit rate to 4.0 percent, both effective Sept. 17. The minutes say markets had priced in high odds of a 25 basis point increase and that investors placed considerable probability on at least that much tightening by year-end.
On the economy, the staff estimated core PCE inflation, which leaves out energy and many food prices, stayed at 3.4 percent in August, higher than a year earlier. The unemployment rate moved down to 4.1 percent in July and August. Participants described growth as solid in the first half of the year, and the minutes call risks to the employment and growth forecasts roughly balanced.
For households, a higher federal funds target generally pushes up the rates on credit cards, home equity lines and other variable-rate debt. The minutes do not forecast any particular loan rate, and they describe committee discussion, not a promise of future increases. People carrying variable-rate balances may want to check their current rate and any scheduled adjustments.