Fed Minutes Show Wariness Over Global Growth

Angst About Overseas Economies, Strong Dollar Ease Path for Keeping Rates Low.

Federal Reserve officials have become more concerned that weak overseas growth and a strengthening U.S. dollar will crimp the domestic economy and hold down inflation, an outlook that has made them more inclined to stick to low interest rates.

Several officials worried at a Sept. 16-17 policy meeting that disappointing growth in Europe, Japan and China could restrain U.S. exports, according to minutes of the meeting released by the Fed Wednesday with the regular three-week lag. Meantime, the stronger currency—by reducing the cost of imported goods and services and putting downward pressure on commodities prices—could hold U.S. inflation below the Fed’s 2% objective. The Fed staff slightly reduced its projection for medium-run growth in part because of these concerns.

Angst about global growth and the economic impacts of a strong dollar represent a meaningful development in the Fed’s running debate about when to raise short-term interest rates from near zero.

Investors responded with relief to the Fed’s concerns and apparent caution about stepping away quickly from easy-money policies. The Dow Jones Industrial Average posted its largest one-day point and percentage increase since December 2013.

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