Post by account_disabled on Feb 28, 2024 4:25:45 GMT -6
Federal Reserve officials have become more cautious about the need to continue raising interest rates even though they unanimously backed an increase in the benchmark rate last month, according to July meeting minutes. Several policymakers expressed concern that the risks of “tightening too much” monetary policy versus not doing enough to reduce persistently high inflation had become more balanced or “bilateral.” Even as policymakers remained concerned about the risks of high inflation, the minutes appeared to show growing concern about the effects of the Fed's tightening campaign on the economy. Officials unanimously backed a 25 basis point rate increase last month. A couple of participants indicated a preference for keeping rates stable, arguing that doing so would “likely result in greater progress toward the committee's goals while allowing the committee time to further evaluate this progress.” July's quarter-point increase lifted the federal funds rate to a target range of 5.25 to 5.5 percent, the highest level in 22 years.
It followed a brief pause in June, when officials took a more gradual approach to tightening monetary policy after the most aggressive campaign in decades. Economists generally expect last month's Job Function Email Database rate increase to have been the last of the year, even though central bank officials in June projected the benchmark rate would peak a quarter of a percentage point higher in 5.5-5.75 percent. Fed Chair Jay Powell emphasized last month that the Federal Open Market Committee will digest the “totality” of the economic data before the next meeting in September, but acknowledged that “given how far we have come, we can give the luxury of being a little patient” when it comes to further rate hikes. Inflation remains too high for the Fed's liking, even as price pressures have eased in recent weeks and are expected to continue to retreat in the coming months.
While the labor market has cooled further, consumer spending on goods and services has remained strong despite higher borrowing costs than just over a year ago, when the benchmark U.S. interest rate Fed hovered near zero. As a result, fears that the U.S. economy will fall into a recession have eased, and Fed officials have ruled out their call for a mild contraction this year. Still, they expect a “notable slowdown in growth,” according to Powell, who has long been optimistic about the prospects for a so-called soft landing. Halting rate hikes again in September would give the Fed more time to take stock of how the economy is responding to previous increases, or whether borrowing costs need to rise further to bring inflation back down to target. long-standing.
It followed a brief pause in June, when officials took a more gradual approach to tightening monetary policy after the most aggressive campaign in decades. Economists generally expect last month's Job Function Email Database rate increase to have been the last of the year, even though central bank officials in June projected the benchmark rate would peak a quarter of a percentage point higher in 5.5-5.75 percent. Fed Chair Jay Powell emphasized last month that the Federal Open Market Committee will digest the “totality” of the economic data before the next meeting in September, but acknowledged that “given how far we have come, we can give the luxury of being a little patient” when it comes to further rate hikes. Inflation remains too high for the Fed's liking, even as price pressures have eased in recent weeks and are expected to continue to retreat in the coming months.
While the labor market has cooled further, consumer spending on goods and services has remained strong despite higher borrowing costs than just over a year ago, when the benchmark U.S. interest rate Fed hovered near zero. As a result, fears that the U.S. economy will fall into a recession have eased, and Fed officials have ruled out their call for a mild contraction this year. Still, they expect a “notable slowdown in growth,” according to Powell, who has long been optimistic about the prospects for a so-called soft landing. Halting rate hikes again in September would give the Fed more time to take stock of how the economy is responding to previous increases, or whether borrowing costs need to rise further to bring inflation back down to target. long-standing.