Fed Minutes Push U.S. Stocks Slightly Higher

Federal Reserve

U.S. stock markets edged higher on Thursday after the Federal Reserve minutes of the last meeting this year showed that nearly all officials agreed that there was no need for another interest rate hike “fairly soon.”

“Almost all participants expressed the view that another increase in the target range for the federal funds rate was likely to be warranted fairly soon,’’ assuming the labor market and inflation remain in line or stronger than their current forecast, the Fed said in the transcript of its session held on November 7-8.

The minutes from the meeting show that the key goal of the central bank as 2019 approaches is to enhance flexibility. Federal Open Market Committee officials said another rate hike will be warranted in the near future, but many also hinted that they may soon drop the language of calling for “further gradual rate increases” from their official statement.

Economic experts believe the change would make policy nimbler by showing that the Federal Reserve is open-minded on how far-off tightening should go. Officials agreed to hold rates steady at a rate of between 2% and 2.25%.

Stock markets broke into positive territory immediately after the minutes were made public, with the Dow Jones Industrial Average rising 43.70 points, or 0.2%, S&P 500 gained 0.1% to 2745.6, while the Nasdaq Composite was up 0.2%

Earlier, Wall Street had shifted its attention to the 2018 Group of 20 summit that will take place over the weekend in Bueno Aires, Argentina. All eyes will be on several important issues, including a high-stakes meeting between President Donald Trump and President Xi Jinping of China, as well as the possible ratification of the USMCA trade agreement involving the U.S., Mexico, and Canada.

Investors will be keenly following to see if Trump and his Chinese counterpart can reach a consensus that can bring an end to the ongoing trade friction between Washington and Beijing.

Before boarding Air Force One to fly to Argentina for the G20 meeting, Trump said he was close to making a trade deal with Asian economic giant, but added that he is not sure he wants to do it and is fine with how things are now.