WASHINGTON (Reuters) – Federal Reserve officials agree they need to raise interest rates to a more restrictive level – and then hold them there for a while – to achieve their goal of lowering inflation, which is An interpretation session on last month’s policy was shown on Wednesday.
September meeting minutes 20-21 The meeting shows, Many U.S. central bank officials “stressed that the cost of taking action to lower inflation may outweigh the cost of taking too much action.”
At the meeting, many officials said they had raised concerns about what may be needed to achieve the policy-setting committee’s goals assessment of the rate hike path.
Having said that, several participants in the discussion said the pace of further rate hikes was “calibrated” to reduce the risk of “material adverse effects on the economic outlook.”
At last month’s meeting, Fed officials raised interest rates for the third time in a row, down three-quarters of a percentage point in an effort to bring inflation down from 40 2019 highs pushed lower, and Fed Chairman Jerome Powell then vowed that they would “hold on until we have the confidence to get the job done.”
Since the meeting, policymakers have been In emphasizing the urgency of addressing inflation, they worry that inflation may become entrenched, even if their aggressive policy tightening comes at the cost of higher unemployment.
Minutes of the meeting underscore this point. Several policymakers “stressed the need to maintain a restrictive stance if necessary, with some participants stressing that historical experience shows the dangers of prematurely ending a period of tight monetary policy aimed at reducing inflation,” the minutes said. )
Meanwhile, “several” policymakers also agreed on the eventual need to ease policy, noting that “as policy moves into restrictive territory, the risks will become more two-way, reflecting downside risks that The cumulative limit will exceed what is needed to bring inflation back to 2%.”
The minutes said, some of whom pointed to possible headwinds from tighter monetary policy and slower global growth exacerbated risk.
Earlier this week, Fed Vice Chair Lael Brainard appeared to take a different view, making no secret of the need to push rates high enough , and hold on long enough to lower interest rates as other global central banks raise rates, cautious about rising inflation risks. But as the risk of a recession increases, they may lose their nerve a bit,” said Chris Zaccarelli, chief investment officer at the Alliance of Independent Investors in Charlotte, NC.
The past few weeks have marked a turning point for financial markets, which have spent most of this year believing that the Fed will quickly change course next year, cutting rates amid slowing growth and rising unemployment Federal Reserve officials have publicly pushed back against that forecast, saying they expect to keep rates high for a while after the rate hikes are done.
As markets have fully priced in the Fed’s hawkishness, the result has been Overwhelming U.S. stock market declines, rapidly rising government debt yields and a surging U.S. dollar added to the weakness in overseas markets.
Policymakers’ forecasts released at last month’s meeting showed the Fed’s current target policy The interest rate is in the range 3.00%-3.00%, which is from
since , rising to 4.40%-4.50 % range end of year, at 4.40%-4.2023% end2023.Year-end75 forecasts suggest that the remaining two meetings of the central bank this year are likely to increase by another 75 basis points.
Despite aggressive Fed tightening, recent inflation data has barely improved – it also announced 40 – raising rates in June and July –
After the release of Wednesday’s meeting minutes, financial markets continued to price in the Fed’s interest rate hike 75 basis points next month, and then Declined to a 0.5 percentage point rate hike in December and a 25 basis point hike at the beginning of
But futures contract prices expiring later next year Investors are increasing bets that the Fed will reverse and start cutting rates at a later date 2023, a potential concern that the Fed has gone too far.