Fed Minutes Detail Inflation, Fuel-Price Concerns

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igher fuel prices could filter into the cost of consumer goods at least in the short term, potentially curbing spending and economic growth, according to minutes of the Aug. 9 Federal Reserve Open Market Committee meeting, which were released Tuesday.

“Elevated energy prices were seen as likely to be a significant drag on consumption," the minutes said. "Participants commented that an increase in inflation from recent rates could have especially adverse effects on longer- run economic growth."

At the meeting, the FOMC raised its growth forecast for 2005 because of increased demand in the economy and lowered it for next year in part because of higher oil prices, the minutes said.

FOMC members at the meeting raised the benchmark federal funds rate by a quarter point to 3.5%, a 10th straight increase, to stay ahead of inflation. The committee repeated a plan to carry out further increases at a "measured" pace.

The meeting was the fifth of eight FOMC meetings scheduled for this year. The next is set for Sept. 20.