Federal Reserve unanimously backed higher interest rates, despite Trump

Treasury Secretary Steve Mnuchin right says the president respects the central bank's independence

JACQUELYN MARTIN APTreasury Secretary Steve Mnuchin right says the president respects the central bank's independence

At the September meeting, the Fed boosted its key policy rate for a third time this year.

President Donald Trump continued his attacks against the Federal Reserve on Tuesday, calling the Fed his "biggest threat" due to its raising short-term interest rates. Based on current economic forecasts, the Fed expects to boost rates once more in 2018, followed by three rate hikes in 2019.

As well as making life more hard for USA exporters, a stronger greenback also raises the borrowing costs of many heavily-indebted emerging market economies, such as those in Latin America which have high levels of dollar-denominated borrowing.

Wall Street, which had struggled through much of the day, closed slightly lower, with stocks paring losses after the minutes' release. U.S. Treasury yields were little changed.

Mike Loewengart, vice president of investment strategy at E*Trade, said: "For now, the Fed has made it clear that they are focused on their agenda despite rising presidential pressure on their rate decisions".

This would move USA interest rates slightly above what policymakers say is "neutral" - that is, neither slowing nor speeding the economy - but some participants said the Fed would need to go even further than that.

Compared to the minutes of Fed's previous meeting held in August, the September minutes appeared to show less discussion around the prospects that a recession might be lurking around the corner.

Some investors say that, after years of easy money, pockets of risk have built up throughout the global economy as borrowing costs begin to increase - raising the chances that a bubble could burst or banks could see significant defaults on debt. Rather, some of the central bankers appeared to see some indications of a stronger USA economy.

'A few participants expected that policy would need to become modestly restrictive for a time, ' according to the minutes.

Still, policymakers noted that the relative weakness of the global economy could create "potential for further strengthening of the USA dollar", a factor that could weigh on US exports.

The minutes did note concerns about the impact of Trump's get-tough trade policies, citing business contacts who expressed worries about lost markets and rising prices for steel and aluminum.

Inflation rates hit a six-year high in July. "I'm anxious about the fact that they seem to like raising interest rates".

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