US Federal Reserve Board Split Over Interest Rate Rise

Rate setters at the Federal Reserve are divided over when the next interest rate rise should be, according to minutes from the US central bank’s policy meeting.

Some members believed that more data was needed before any decision could be reached, but others anticipated "economic conditions would soon warrant taking another step," according to the minutes.

It is expected that the US central bank will increase interest rates this year, however there is still speculation as to when and if this rate change will be imposed.

The last rate hike, the first in nearly a decade, was introduced by the Fed last December, but market volatility and a global growth slowdown has meant rates have remained unchanged since then.

The Fed decided to hold rates between 0.25% and 0.5% at its July meeting, but several policymakers expressed concern that low interests could have a negative impact on financial stability.

Brian Dolan, head market strategist at Drivewealth, said that the minutes "contained more concrete indications that a consensus to raise rates is slowly building".

A rise in interest rates generally curbs inflation, but it also means that consumers cut back on spending as they do not have as much disposable income.

The lower the interest rate, the more willing people are to borrow money to make big purchases such as houses and cars, and this subsequently can create a ripple effect of more spending throughout the economy.

Inflation has remained below the central bank's 2% target.

The minutes were released a day after the New York Fed President William Dudley said "it's possible" that rates may rise at the policy meeting at the end of September.

His statement was echoed by the Atlanta Fed President Dennis Lockhart, who said a rate hike next month "is in play".

Investors and traders looking for clues about whether that rate increase will come in September, or later in the year, will now focus on next week's annual meeting of central bankers in Jackson Hole, Wyoming.