Minutes could shed light on Fed 2017 forecast

If you're looking for someone or something to blame for the Dow’s recent fall-off and failure to break through the 20,000 milestone, the Federal Reserve is at least in the mix.

The Fed tossed some cold water on the postelection run-up in stocks a few weeks ago when it not only boosted interest rates as expected but forecast three rate hikes in 2017 instead of the two moves previously anticipated.

Fed Chair Janet Yellen told reporters that President-elect Donald Trump’s proposal to beef up infrastructure spending and cut taxes “may have been a factor” for some policymakers. The plan could stoke faster inflation that the Fed is likely to temper by raising borrowing costs. Yellen also cited the jobless rate, which fell from 4.9% to 4.6% in November and could auger bigger wage and price increases next year.

What a Fed rate hike means for you (get ready to pay more)

Yet Yellen also downplayed the significance of the revised rate hike forecast. And the median estimate of the 17 members of the Federal Open Market Committee doesn't necessarily reflect what the panel will do, which depends on the economy and labor market next year, as well as inflation.

What’s more, six committee members predicted no more than two rate increases next year. Yellen and other key Fed officials may well be among that group.

The minutes of the December 13-14 Fed meeting, out Wednesday, should provide a detailed look at the debate among Fed officials and their reasons for stepping up their rate hike forecasts.