Global Statistics

All countries
704,753,890
Confirmed
Updated on May 20, 2024 1:53 am
All countries
560,567,666
Recovered
Updated on May 20, 2024 1:53 am
All countries
7,010,681
Deaths
Updated on May 20, 2024 1:53 am

Global Statistics

All countries
704,753,890
Confirmed
Updated on May 20, 2024 1:53 am
All countries
560,567,666
Recovered
Updated on May 20, 2024 1:53 am
All countries
7,010,681
Deaths
Updated on May 20, 2024 1:53 am
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US Fed minutes flag high rates for “some time” while risks shift

Last month, Federal Reserve policymakers reached a consensus that a tight monetary policy should be maintained for the time being. However, they acknowledged the need to strike a balance between avoiding excessive tightening and ensuring that inflation gradually declined toward the target of 2%. The minutes of the September meeting, released in Washington on Wednesday, stated that participants generally agreed that the current restrictive monetary policy warranted a careful assessment, as the risks to achieving the committee’s objectives had become more balanced.

In their recent meeting, all participants of the Federal Reserve agreed that the committee should proceed cautiously with its monetary policy decisions. They emphasized that these decisions would be contingent on data and would consider the balance of risks.

According to Jennifer Lee, senior economist at BMO Capital Markets, the Fed officials are refraining from making drastic changes to their policy stance despite concerns about unacceptably high inflation and potential upside risks. In the last meeting, the Fed kept its benchmark lending rate within the range of 5.25-5.5% and hinted at maintaining higher rates for a longer period after a planned rate increase later in the year.

However, a surge in long-term Treasury yields has led some policymakers to consider postponing another rate hike during the October 31 – November 1 meeting while they analyze the reasons behind the increase.

The minutes revealed that a majority of Fed officials believed that one more rate increase would likely be necessary to curb demand and bring inflation closer to the 2% target over the next two years. However, some officials argued that further increases might not be warranted.

According to Omair Sharif of Inflation Insights, the Fed is grappling with the balancing act of avoiding excessive tightening while ensuring that inflation moves toward a sustainable path to reach the 2% target. The uncertainty about inflation’s trajectory has led the committee to proceed cautiously.

Fed Vice Chair Philip Jefferson and Dallas Fed President Lorie Logan expressed concerns about the tightening financial conditions due to higher bond yields. Their comments led to a rally in bond markets, with futures markets indicating a low probability of a rate increase at the next Fed meeting.

Several Fed speakers, including Governor Christopher Waller and Atlanta Fed President Raphael Bostic, advocated for a prudent approach, suggesting that the central bank should monitor developments before making further adjustments to interest rates. The minutes highlighted the solid pace of economic expansion, improving labor markets, and inflation, which, although moderated, still exceeded the target. Fed officials believe that economic growth needs to fall below the 1.8% trend rate to effectively address rising prices.

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