Fed worries about China slowdown, strong dollar: minutes

Federal Reserve policymakers voiced concerns about the impact of the slowing global economy, led by China, and the stronger dollar on the US economy last month, a Fed document showed Thursday.

At the September 16-17 meeting of the Federal Open Market Committee (FOMC), several participants were worried about downward inflation pressures from lower energy prices and the appreciation of the dollar, according to the minutes of the meeting.

"Recent global and financial market developments might restrain economic activity somewhat as a result of the higher level of the dollar and possible effects of slower economic growth in China and in a number of emerging market and commodity producing economies," said the minutes, which mentioned China four times.

The minutes revealed a number of concerns that influenced the committee's decision to leave the benchmark interest rate near zero, where it has been since December 2008 to support the economy through the worst recession since the 1930s and its recovery.

The appreciation of the dollar since mid-2014 remained a drag on US exports and could further weigh on economic growth, the participants worried.

Although the economy was considered to be growing moderately and the labor market was nearing full employment, the Fed policymakers appeared less optimistic that inflation would move toward the central bank's longer-term 2.0 percent target.

"Some participants judged that the downside risks to the outlook for economic growth and inflation had increased," the minutes said.

"In part because of the risks to the outlook for economic activity and inflation, the Committee decided that it was prudent to wait for additional information confirming that the economic outlook had not deteriorated and bolstering members' confidence that inflation would gradually move up toward 2 percent over the medium term."