Fed officials link interest rate increases to stronger economic data

The Boston Globe | By Martin Crutsinger
October 9, 2014

WASHINGTON — Federal Reserve officials, worried about weak growth overseas, agreed last month they would begin raising interest rates only when measures of the economy’s health and inflation signaled the time was right.

Minutes of the Fed’s discussions at the Sept. 16-17 meeting, released Wednesday, showed that officials expressed stronger concern about lackluster growth in Europe, as well as slowing growth in Japan and China.

After release of the minutes, the US stock market surged to its biggest gain of the year. Investors appeared to take the revealed discussion as a sign that the Fed was in no hurry to raise interest rates. The Dow Jones industrial average jumped 274 points, or 1.6 percent, to 16,994.

‘‘The markets like the news that there is no urgency on the part of Fed officials to stop doing what they are doing,’’ said Chris Rupkey, chief financial economist at MUFG Union Bank in New York.

Fed officials also discussed the potential adverse effect of a stronger dollar, which has advanced recently against the euro, yen, and British pound. A stronger dollar makes US goods more expensive overseas and foreign goods cheaper in the United States, a development that can dampen inflation but hurt US manufacturing.

‘‘Some participants expressed concern that the persistent shortfall of economic growth and inflation in the euro area could lead to a further appreciation of the US dollar and have adverse effects on the US external sector,’’ the minutes said.

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