Fed could raise rates as soon as September

The Federal Reserve could raise interest rates later this year and possibly as soon as September, according to minutes from the Fed’s most recent policy meeting in June.

Officials were encouraged by recent economic data including indicators that wages are starting to rise more quickly, with the meeting’s tone and more recent public remarks suggesting the central bank is likely to raise rates later this year.

The minutes did not address the exact timing of an initial interest rate increase, according to the New York Times, though analysts said the meeting’s description suggested the Fed could raise rates as soon as September. Fed officials also concluded that economic problems during the winter were overstated, according to the newspaper.

John Williams, president of the Federal Reserve Bank of San Francisco, said this week that his staff had calculated 1.5 percent growth in the economy in the first quarter, compared to reports that had indicated a slight decline in economic activity.

An increase in interest rates could test momentum in the housing market, with low mortgage rates having helped home prices rebound in wake of the financial crisis. [NYT] – Rey Mashayekhi