U.S. equity indexes rose, gold and the U.S. Dollar traded mixed after the release of the Fed monetary policy minutes at 1800 GMT. U.S. Treasury yields traded mostly higher as investors digested the latest minutes and two Treasury auctions.

The yield on the benchmark 10-year Treasury note was basically flat at 2.343 percent at 1806 GMT, while the yield on the 30-year Treasury Bond fell slightly to 2.874 percent.

The U.S. Federal Reserve minutes from its September 20 monetary policy meeting showed that the central bank sees the economy expanding at a steady clip and an interest rate hike later this year is nearly a sure thing, despite some divisions over where inflation is headed.

The minutes also showed policymakers anticipate that the factors slowing down inflation will pass. The expectation is that will lead to the number hitting the 2 percent target the central bank believes is consistent with healthy growth.

Although the Fed Funds indicator has put the chances of a Fed rate hike in December at about 90 percent, the Fed minutes showed there was still some uncertainty among Federal Open Market Committee members.

Some policymakers wondered whether an interest rate hike was needed in December. Several Fed officials said that they now believed it would be longer than they had previously thought to get inflation back to the central bank’s 2% target.

As a result, many noted that “some patience” was warranted in hiking interest rates in order to assess trends in inflation, the minutes said.

The FOMC was split between doves and hawks.

The hawks, like Kansas City Fed President Esther George want the central bank to continue to hike, warning that delaying rate hikes could spark asset bubbles.

Doves, like Minneapolis Fed President Neel Kashkari want to wait until inflation is clearly on a path toward 2% or higher.

Given the split between the doves and the hawks, it appears that Fed Chair Janet Yellen holds the swing vote and based on recent speeches, she is in favor of more rate hikes.

This article was originally posted on FX Empire


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