This month’s 50 basis point rate hike was the first of that size in more than 20 years and has put the Fed on the path of rapid monetary tightening, with “a majority of authorities” judging that further half-point hikes are “likely to be appropriate” at the June and July meetings, according to the minutes, They were published this Wednesday.
“All participants agreed that the US economy was very strong, the labor market was extremely tight, and inflation was very high.”according to the minutes, with “upside” risks of even faster inflation given ongoing global supply problems, the war in Ukraine and continued coronavirus lockdowns in China.
In that context, “Participants agreed that the (Federal Open Market) Committee should quickly move the monetary policy stance toward a neutral stance… They also noted that a restrictive policy stance may be appropriate.”
“Many participants” judged that raising rates now “would put the Committee in a good position to assess the effects of tighter monetary policy later in the year.”
The minutes show the Fed grappling with how best to steer the economy toward lower inflation without causing a recession or pushing the unemployment rate substantially higher, a task that “several participants” at this month’s meeting said would be a challenge. challenge in today’s environment.
“Several” Fed officials said the data had begun to indicate that inflation “might stop getting worse.”
But even they agreed that it was “too soon to be confident that inflation had peaked.”
Source: Ambito
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