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– This is the script of CNBC's news report for China's CCTV on October 13, Thursday.
Welcome to CNBC Business Daily, I'm Qian Chen.
Federal Reserve officials who favor hiking interest rates worry that waiting too long could send the country into a recession.
At an unusually divisive Federal Open Market Committee meeting in September, hawkish members said history holds a worrisome lesson for a central bank that has kept a historically accommodative monetary policy in place for the past eight years.
The worry is that if the Fed waits too long, it could be forced into having to raise rates aggressively to slow the economy.
[SAM CHANDAN, Chandan Economics President & Chief Economist] "If we continue to delay increasing rates because our hands are tight by stronger inflationary pressure simply wait for that to happen, that ultimately once we begin to obsorb those pressures will be required to tighten upon montary policy fairly abruptly. And just that abrupt tightening that can be difficult for the market to internalize that can create dislocations in the market. Ultimatley could be one of approximate causes of a contraction activity."
Ultimately, the FOMC decided not to hike. The dovish side argued that the economy is still growing slowly - gross domestic product for the first half of the year was around 1 percent - and that inflation remains muted, meaning that the chances for having to change course abruptly is low.
Three members, however, dissented, looking for the Fed to approve a quarter-point hike that would have been only the second increase in more than 10 years. The "no" votes came from Esther George, Loretta Mester and Eric Rosengren.
The decision not to hike came even though members agreed that the job market has "improved appreciably" while risks to the economic forecast are "roughly balanced."
Overall, FOMC members felt the economy was making progress, though they continued to worry over business investment. Some members at the meeting noted that weakness in capital expenditures is starting to expand beyond energy and into other sectors.
The decision not to hike was a "close call" as some members worried that the Fed "risked eroding its credibility" by not hiking as the data approaches and eclipses target levels, the minutes said.
Even a benign interpretation has been that the Fed won't hike in November because it doesn't want to disrupt the election in either direction. The Federal Open Market Committee meeting concludes Nov. 2, with the election just six days later. Traders give just an 9.3 percent chance of a move at the meeting.
Fed Fund futures indicate that the probability for a December hike is now close to 70%.
CNBC Qian Chen, reporting from Singapore.