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A 1/2-point Feb. rate hike?
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March 23, 2000: 3:21 p.m. ET
Some Fed members advocated the need for more tightening, FOMC minutes reveal
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NEW YORK (CNNfn) - Federal Reserve policy makers were unanimous in their decision to raise interest rates by a quarter point at their February meeting, and some members pushed for a half-point rate hike to really put the brakes on the economy, according to minutes of that meeting, released Thursday.
Members of the Federal Open Market Committee voted unanimously to raise the so-called fed funds rate -- the target interest rate at which commercial banks lend to each other overnight -- a quarter percentage point to 5.75 percent, the fourth rate rise since June, minutes of the Feb. 1-2 meeting revealed. The FOMC raised the trend-setting rate again Tuesday to 6 percent.
A few of the members indicated they would rather take the more unusual approach of raising the benchmark rate by a half a percentage point at the conclusion of the meeting, "in order to provide greater assurance against a buildup of inflationary expectations and inflation over the coming months," even though most member saw little evidence of accelerating inflation, the minutes said.
The fact that the influential FOMC was considering taking a more drastic move to slow the economy as far back as February signaled to market watchers that the Fed might be more concerned about the pace of the economy and the threat of inflation than previously thought. The Fed has consistently raised rates in quarter-point increments since last June.
The minutes "clearly raise the risk that the Fed could eventually shift to 50 basis point rate increases, perhaps as early as May 16 (the next FOMC meeting," Tony Crescenzi, a markets analyst with Miller Tabak & Co., wrote in an e-mail to clients following the release of the minutes.
Indeed, the minutes suggest just that. Members who were in favor of a keeping the rate increases to quarter-point increments "acknowledged that the committee might need to move more aggressively at a later meeting should imbalances continue to build and inflation and inflation expectations begin to pick up," according to the minutes.
The FOMC meets eight times per year at intervals of five-to-eight weeks. Deliberations are held in secret, though the minutes of each meeting are typically released two days following the next FOMC meeting. Minutes of the FOMC meeting that led to that announcement will be released on in late May, following the next FOMC session. 
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U.S. Federal Reserve
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