US rates hike 'expected by the end of the year'

Minutes from the Federal Reserve's September meeting show the majority of policy-makers expect a hike in US interest rates by the end of the year.

At its meeting, the Fed opted to hold rates between 0.25% and 0.5%. But three officials opposed the decision - the most dissents since December 2014.

The Fed said: "The case for an increase in the federal funds rate has strengthened," but said it would wait for more evidence of economic progress.


Doug Duncan, chief economist for Fannie Mae, said: "There's a pretty big dissent. There seems to be a pretty big discussion about the direction on rates. "It's clear they want to raise rates in December if things don't deteriorate."

Risks 'roughly balanced'

The Fed said US economic activity had picked up and job gains were "solid" in recent months. The US central bank said it saw near-term risks to the economy as "roughly balanced." It was the first time it has used that wording since late last year, when it most recently raised rates.

The Federal Open Market Committee had decided against raising rates "for the time being," until there was more evidence of progress towards its employment and inflation objectives.

The committee said it expects inflation to remain low in the near term, "in part because of earlier declines in energy prices", but that it would rise to the Fed's 2% target over the medium term.

Policymakers have been divided when the next rate rise should be, with stock market volatility, China's slowing economy, and Brexit among its concerns.