Some Fed Members Want 'Relatively Prompt' Rate Hikes, Minutes Show

(RTTNews) - The Federal Reserve debated when to hike interest rates amid signs the labor market has moved closer to normal, according to the minutes of the Fed's July policy meeting.

At the meeting held July 29-30 the Federal Open Market Committee voted 9-1 to maintain its current policy of slowly withdrawing stimulus from the U.S. economy.

Fed forecasts show most officials expect to start raising rates next year, but some members wanted "relatively prompt" rate hike.

The majority of Fed voters, however, think the Fed should be patient before hiking rates, as slack in the labor market remains a concern. The jobless rate rose to 6.2 percent in July.

"Participants generally agreed that both the recent improvement in labor market conditions and the cumulative progress over the past year had been greater than anticipated and that labor market conditions had moved noticeably closer to those viewed as normal in the longer run. Participants differed, however, in their assessments of the remaining degree of labor market slack and how to measure it," the minutes read.

Members also acknowledged other headwinds endure, including erratic improvements in housing and retail spending.

"The recovery in housing activity remained slow according to most participants. Although mortgage rates were still low and housing appeared to be relatively affordable, various factors were seen as restraining demand, including low expected income and high levels of student debt as well as difficulty in obtaining mortgage credit, particularly for younger, first-time homebuyers," the minutes read.

With inflation still under the Fed's target of 2 percent, the Fed may have room to signal low interest rates until a rise in consumer prices is sustained.

Focus now shifts to Jackson Hole, Wyoming for speeches from the Fed's annual symposium. Chairman Janet Yellen will deliver remarks on Friday that will be scrutinized for any hints that tightening is imminent.

European Central Bank President Mario Draghi will also speak amid pressure for the ECB to offer additional stimulus to jumpstart that region's sluggish economy.