Fed officials inserted language into their October statement to stress that “it may well become appropriate” to raise the benchmark lending rate in December and largely agreed that the pace of increases would be gradual, minutes of the meeting showed. A majority of Fed officials have signaled they expect to raise interest rates this year for the first time since 2006.

Equities rallied ahead of the minutes as policy makers earlier signaled confidence in the economy and stuck to the message that rate increases will not be hurried. The S&P 500 had fallen as much as 4 percent after Fed Chair Janet Yellen earlier this month reminded investors that raising rates in December was a “live possibility,” and jobs data showed the biggest increase in hiring this year. The gauge has since pared its drop since Yellen’s comments to a 1.2 percent decline.

Gradual Pace
Federal Reserve Bank of Atlanta President Dennis Lockhart said today he’s comfortable with raising rates soon, and the path of increases will be shallow and slower than in the past. His remarks came during a panel at a Clearing House event in New York. Traders are pricing in a 66 percent probability of a move — odds that shot up after a stronger-than-expected October jobs report on Nov. 6.

As policy makers assess the strength of the economy, data today showed new-home building declined more than projected in October, led by a slump in apartment construction. On the positive side, construction permits for single-family homes increased the most since 2007, indicating ground-breaking will rebound in coming months.

“It’s the pace and the duration now that’s the topic of conversation as opposed to when liftoff will take place,” Kevin Mahn, president of Parsippany, New Jersey-based Hennion & Walsh Asset Management Inc., said in phone interview. “The next thing the bull market needs is reassurance from the Fed that the economy is on stable ground, and that will come in the form of a rate hike.”

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