Is the Fed forced to admit to the fragile nature of the financial markets?
"St. Louis Fed chief William Poole said in a speech in his bank's home town that financial markets have stabilized, yet 'have not returned to normal and are still fragile.'
Boston Fed President Eric Rosengren, in his first speech since taking office in July, said while 'investors are not reassessing risk in a wholesale way,' it will likely take 'some time' for them to become more confident about assessing some types of securities.
Policy makers all concluded it was best to lower their benchmark rate by half a point to 4.75 percent, double the amount that most economists forecast, the minutes showed.
Yields on federal funds futures contracts show a 64 percent probability that Fed officials will leave the benchmark lending rate unchanged at this month's meeting.
Risks to Economy
'Further actions would depend on how economic prospects were affected by evolving market developments and by other factors,' according to the records. Any statement on the balance of risks to the economy 'could give the mistaken impression that the committee was more certain about the economic outlook than was in fact the case.'
Fed officials continued to express concern about inflation, citing labor costs and a weaker dollar, the minutes showed. The currency fell to a record low of $1.4283 per euro on Oct. 1.
'Inflation risks could be heightened if the dollar were to continue to depreciate significantly,' the minutes said."