Debate shifts to how fast the Fed should move after first rate hike

Washington

FOR the Federal Reserve, deciding when to raise rates for the first time in nearly a decade has become the easy part.

The harder call, and one increasingly preoccupying US central bankers, is how fast to move after that, navigating stuttering global growth and nervous markets on the Fed's long journey back to pre-crisis policies.

Betting on the "lift-off" of rates from near-zero has become less of a gamble, particularly after an exceptionally strong jobs report two Fridays ago. After months of wavering as the global economy appeared to weaken, investors have pegged that first rate rise to the middle of next year, and seem to have accepted that the US economy can go its own way.

Recent conversations with Fed policymakers, staff and economists point to an internal debate shifting from the first rate move to the pace of increases thereafter. Stagnant inflation has become less of a concern in light of continued improvement in labour markets. Barring a serious shock, policymakers have indicated they will press ahead with lift-off in coming months, then move cautiously to ensure they do not stifle the recovery by acting too…