Weekly Market Commentary 10/13/2017

The minutes of the Fed’s policy-setting meeting on September 19-20, released with the usual three-week lag this week, generally confirmed the widespread perception that the central bank is poised to hike short-term interest rates in December. As expected, the meeting featured a vigorous discussion about the persistence of low inflation, which has remained stubbornly below the central bank’s 2% target despite the ever-tightening labor market and above-trend growth in the overall economy. While some Fed officials would like to hold off on rate hikes until inflation perks up, the majority expressed confidence that underlying fundamentals in the economy, particularly the removal of slack in the labor market, would guide the inflation rate up to the 2% target over the medium term.