The Federal Reserve's September meeting minutes show policymakers were split over the rationale for last month's 25bp increase. Some participants said a hike was needed to limit the pass-through from energy and other supply-price shocks; more hawkish officials said action was required to guard against emerging demand-driven inflation. Officials voted unanimously for the 25bp rise but disagreed on whether it was precautionary or signaled a clear shift to tighter policy. That division, and differi

The Federal Reserve's September meeting minutes show policymakers were split over the rationale for last month's 25bp increase. Some participants said a hike was needed to limit the pass-through from energy and other supply-price shocks; more hawkish officials said action was required to guard against emerging demand-driven inflation. Officials voted unanimously for the 25bp rise but disagreed on whether it was precautionary or signaled a clear shift to tighter policy. That division, and differing economic assessments, suggests October discussions could be contentious. The minutes say many participants viewed raising the path of the federal funds rate target range as prudent from a risk-management perspective to guard against inflation running above target if demand surprised on the upside or adverse supply shocks recurred. Others said the increase was important to prevent recent energy and other shocks from broadening; two participants supported the hike because it aligned with their view that the neutral rate had risen. Several participants judged the current policy rate to be nonrestrictive or only modestly restrictive, and most saw another hike as potentially appropriate by year-end.