The minutes of the June monetary policy meeting of the Federal Reserve, which will be published this Wednesday, will probably show an active debate among monetary policy makers, who generally seem inclined to support more measures to contain inflation.
The minutes of the meeting will come after the US central bank’s monetary leaders have spent the past three weeks following the June meeting of the Federal Open Market Committee outlining their outlook for monetary policy. Key officials such as Federal Reserve Chairman Jerome Powell have pointed out that forecasts released at the June meeting indicated that a further half a percentage point adjustment was still at stake this year.
“The committee clearly believes that there is more work to be done, that there are likely to be more appropriate rate hikes” at some point during the year, Powell said last Wednesday in an appearance with other central bankers in Portugal. “Although monetary policy is tight, it may not be tight enough and has not been tight enough for long enoughwhich keeps prospects for more hikes alive, Powell said.
The opinion of the Directors
But some believe that enough has already been done. Atlanta Federal Reserve Chairman Raphael Bostic said last Thursday that believes that no further increases are necessary, noting that “the data, survey results and information on the ground make a reasonable case that gradual disinflation will continue.” In his opinion, “this will happen even if the Committee does not raise interest rates.”
The minutes will describe the deliberations that allowed the Federal Reserve, after just over a year of very aggressive rate hikes, to maintain its overnight reference rate between 5% and 5.25%. It stood near zero in March 2022 and has risen rapidly as Federal Reserve policymakers have tried to rein in the worst levels of inflation in decades.
The Federal Reserve kept rates unchanged on June 14, largely to take stock of the impact of the hikes that have already taken place. In recent days, some central bankers have pointed out that the effects of past tightening are still being felt in the economy.
The minutes of the meeting will also add details about what central bank leaders and staff expect for the economy, and some are watching the views of central bank staff with particular interest. Federal Reserve economists have been warning of recessionary prospects for some time and have released a series of recent papers cautioning about some aspects of the economy and financial system.
Tim Duy, chief economist at SGH Macro Advisors in the US, says that “andThe staff at the Federal Reserve appear to be predisposing the Board to expect weak data.”which, if materialized, could tip the balance against the need to raise rates.
Source: Ambito
