Fed saw no-hike decision in September as 'close call'

Rising gold and materials stocks helped push the Toronto stock market higher Wednesday, while NY indices finished flat after the U.S. Federal Reserve released minutes that showed its decision to hold interest rates last month was a "close call".

Minutes from the U.S. Fed's September 20-21 meeting showed officials were inching closer to hiking rates for the first time since last December, but had made a decision to hold off due to inflation and little sign of rising wage pressures.

The Federal Open Market Committee will issue minutes of its latest meeting at 2:00 p.m. ET. "Even within the group that voted to maintain rates where they are, there is apparently one segment which sees a rate hike as imminent, and another which prefers a more cautious approach".

Many economists and investors already believe the Fed has a credibility problem. Some noted that the increase in labor force participation indicated more room for labor supply to expand, thus suggesting proceeding cautiously with reducing monetary policy accommodation was appropriate since it could promote further labor market improvement. The pound touched a historic low against a basket of currencies Tuesday, according to Bank of England data.

In that policy statement, the Fed incorporated new phrasing saying it would maintain current interest rate levels for "the time being", widely seen as a hawkish signal.

The minutes revealed that the decision to stand pat was a "close call". As far as inflation is concerned, many members remarked that there were few signs of emerging inflationary pressures while progress on meeting inflation targets had been slow.

"We remain where we were: a market still betting Chair (Janet) Yellen wants a hike in December", Quincy Krosby, market strategist at Prudential Financial, wrote in a note regarding the minutes.

Nearly all agree that after another rate hike, the path of interest rates will be much shallower than the Fed's last tightening cycle.

Kansas City Fed President Esther George, Cleveland Fed President Loretta Mester and Boston Fed President Eric Rosengren favored a rate hike during the September meeting.

ALBANY, N.Y. The Federal Reserve can be "gentle" in removing monetary stimulus since USA inflation remains low and the economic expansion could last five or more years, one of the most influential Fed policymakers said on Wednesday. The Fed's next meeting is November 1-2. Traders have all but ruled out a move at the November meeting, which takes place just a week before the US presidential election.