Federal Reserve officials at their most recent meeting left room for the possibility of interest rate increases before the end of the year, should economic conditions improve, according to minutes from the session released Wednesday.
The central bank's Federal Open Market Committee voted unanimously to not raise its benchmark rate at the March 19-20 gathering, and simultaneously indicated that it didn't see a likelihood for any hikes through 2019.
However, that came after a discussion in which members said they would be watching the data on an economy most of them expected to improve through the year.
"Several participants noted that their views of the appropriate range for the federal funds rate could shift in either direction based on incoming data and other developments," the meeting summary stated. "Some participants indicated that if the economy evolved as they currently expected, with economic growth above its longer-run trend rate, they would likely judge it appropriate to raise the target range for the federal funds rate modestly later this year."
The suggestion of a modest move implies one quarter-point adjustment in the current target range of 2.25 percent to 2.5 percent. Futures markets are currently pricing in no chance of an increase and in fact a 55% chance that the Fed might choose to cut rates. The expectation for a rate cut following the minutes is "probably just wishful thinking," said Robert Frick, corporate economist at Navy Federal Credit Union.
Through the first months of 2019, market participants have seen a more dovish Fed in favor of a "patient" approach to policy and one that will focus on economic data points like unemployment and inflation. That's a switch from a central bank that hiked rates four times last year and until the March meeting had been indicating two more increases before the end of this year.