WASHINGTON — Some Federal Reserve policymakers in June favored an increase in the benchmark U.S. lending rate “very soon,” according to minutes of that month’s meeting.
The assessment came before last week’s collapse in the stock price of Fannie Mae and Freddie Mac, the largest sources of American home financing, altered Chairman Ben Bernanke’s views about growth risks. Bernanke abandoned the Federal Open Market Committee’s June stance that the threat of an economic downturn had diminished in congressional testimony this week.
The economic outlook made the “timing and magnitude of future policy actions” unclear to the full committee, the records of the policy meeting said. Still, “with increased upside risks to inflation and inflation expectations, members believed that the next change in the stance of policy could well be an increase in the funds rate.”
The FOMC on June 25 left the main interest rate at 2 percent, pausing after seven cuts that totaled 3.25 percentage points since September.
