Key for markets: the Fed projects moderation in the pace of rate hikes

Reflecting statements that various officials have made in recent weeks, the summary of the meeting pointed to small rate hikes on the horizon. Markets widely expect the Federal Open Market Committee that sets rates reduce the increase to 0.5 percentage points in Decemberafter four consecutive increases of 0.75 percentage points.

Although they hinted that smaller moves were in the offing, officials said they still see little sign of inflation abating. However, some committee members expressed concern about the risks to the financial system if the Fed continues to push at the same aggressive pace.

After a headlong rush this year to raise interest rates, the Federal Reserve it shifted this month to a more nuanced approach that was seen as a compromise between policymakers most concerned about high inflation and others concerned that further increases in borrowing costs could weaken the economy or stress markets.

The minutes of the monetary policy meeting of November 1 and 2which will be published this Wednesday, could show the extent to which a disagreement has begun to emerge at the US central bank, at a time when it has ended the tendency to raise interest rates early and has begun to seek a balance point with minor movements to stop them at some point.

“A substantial majority of the participants considered that a slowdown in the rate of increase would probably soon be appropriate,” the record said. “Uncertain delays and magnitudes associated with the effects of monetary policy actions on economic activity and inflation were among the reasons cited as to why such an assessment was important.”

At this point, the Fed Chairman, Jerome Powelland even traditionally easing monetary policymakers, remain in line after further rate hikes, and Powell said it remains riskier to fall short in fixing the worst bout of inflation since the 1980s than to raise rates. in excess.

“If we tightened too much, we could use our tools roundly to support the economy, whereas if we don’t get inflation under control because we don’t tighten enough, we’re now in a situation where inflation is going to take hold and the costs, the employment costs in particular will potentially be much higher,” Powell told a news conference after the end of the November policy meeting.

“From a risk management standpoint, we want to make sure we don’t make the mistake of not tightening enough, or easing too soon,” they said.

However, with the Fed’s hikes since March totaling 3.75 percentage points, including moves of three-quarters of a percentage point in the last four meetings, policymakers have indicated they are willing to rein in the faster pace of tightening. of the central bank since the early 1980s.