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Last Updated: Wednesday, 3 January 2007, 19:55 GMT
Fed hints at future rate increase
US house for sale sign
The Fed also raised concerns about the slowing property market
The US Federal Reserve hinted further interest rate rises may be needed to keep inflation in check at its last policy meeting, minutes show.

At the December meeting, the Fed voted to leave rates on hold at 5.25% for the fourth time in a row.

As well as inflation, the group was also worried about a "substantial" slowdown in the housing market.

Analysts believe the Fed is waiting for a clearer picture of both the US economy and future inflation risk.

'Mixed signals'

"Several members judged that the subdued tone of some incoming indicators meant that the downside risks to economic growth in the near term had increased a little and become a bit more broadly based than previously thought," minutes of the meeting showed.

"Nonetheless, all members agreed that the risk that inflation would fail to moderate as desired remained the predominant concern."

As well as inflation, the report also highlighted the "mixed" signals coming from the economy - with one member calling for a statement saying rates could be adjusted in either direction.

In a statement accompanying its rates decision last month, the Fed left the door open for further rises to rein in inflation should it be needed.

Despite the latest data, manufacturing activity remains weaker than in recent years, the once-buoyant housing market has cooled markedly and consumer spending remains a concern despite a small increase towards the end of the year.

According to the notes of the meeting all but one of the 12-member committee voted to leave rates on hold for the fourth time in a row after 18 successive rises.




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