Furthermore, "some" at the meeting said risks grew as the USA economy increasingly outpaced its rivals" more sluggish growth "because of the potential for further strengthening of the dollar'. Here are five fixed-income ETFs investors should consider as the Fed institutes more short-term rate hikes. The resulting necessary correction is therefore much more needed and will be much more severe. Earlier in the day, St. Louis Fed President James Bullard said the current federal funds rate target of between 2% and 2.25% is "about where it should be".
But the Fed is increasing interest rates from the 0% level - a historic low set during the financial crisis - and many indicators of lending remain loose.
USA oil prices tumbled and Brent also fell on Wednesday after crude inventories rose by much more than expected and exports fell, while the dollar added to gains after minutes showed Federal Reserve policymakers generally agreed borrowing costs were set to rise further.
In 2015, under Janet Yellen, the Federal Reserve started to a process of normalizing interest rates. Recession risks are low, he said, adding "all the indicators now are for a strong economy for a significant period into the future".
The recent increase in interest rates has spooked investors who fear higher borrowing costs could slow down the economy.
But, amid brisk American expansion, some Fed policymakers also warned of looming dangers to the world economy, such as the potential for a strengthening USA dollar and possible contagion from sputtering emerging markets, according to minutes from the Fed's most recent meeting three weeks ago.
Quarles's comments on the economic outlook are rare; as the vice chairman of supervision, Quarles's primary job at the central bank concerns supervision. Inflation has been low for quite a while but it is starting to pick up.
Wednesday's minutes detailing opposition to this view coming from only "a couple" of the Fed's board members have shown the market that the bar to raising rates that high is actually quite low. If and when that happens, my sense is that the president will be thankful for the Fed.
"I think the Fed has gone insane", he said.
Is not participating this week. As shown below, most recessions happen at a time when interest rates are rising. Ergo, the Federal Reserve should be prudent and very careful with each additional increase.
Quarles also suggested that the Fed should pay attention to other indicators that reflect tightness and overheating in the USA economy. With a huge balance sheet driven by previous quantitative easing and an interest rate just slightly over inflation, monetary policy is still highly accommodative.
While there's no sign of inflationary pressures so far, a continuing decline in the level of unemployment below the already-low 3.7 percent it touched in September means officials do have to worry about price gains accelerating.