Federal Reserve officials said at a meeting last month that “upside risks” had receded and concerns about the damage to the economy from “overly restrictive” monetary policy grew, according to central bank minutes. They seemed increasingly confident that inflation was being brought under control. Policy meeting on December 12-13.
As a result, the minutes stated that “nearly all participants expressed the view that it would be appropriate to lower the target range for the federal funds rate by the end of 2024,'' and that “many participants'' It was noted that it underlined the growing uncertainty about how long strict monetary policy would last. This level needs to be maintained given the progress in reducing the inflation rate.
“Several” Fed officials said they felt the Fed was approaching a point where it could face a “trade-off” between its twin goals of controlling inflation and maintaining high employment. . This is the kind of sacrifice that policymakers hoped to avoid in their policy decisions. Seeking a “soft landing'' from the worst outbreak of inflation in 40 years.
“Participants noted the decline in the inflation rate expected in 2023, with particular attention to the recent downturn in the six-month inflation rate,” the minutes said, adding that the inflation rate through November is based on the Fed's He said this was slightly below the target of 2%.
The minutes revealed little about when the rate cuts would begin.
Indeed, participants also noted that there was still a chance of further rate hikes and that there was “an unusually high degree of uncertainty” about the outlook.
But the session's detailed report also reflected ongoing discussions about how to protect the economy as inflation continues to decline.
A “majority” feels that monetary policy is having its intended effect and will continue to do so by keeping household and business spending in check and bringing inflation back on target.
Participants “stressed that it is appropriate for policy to maintain a suppressive stance for some time until there is a clear and sustained decline in inflation towards the Committee's objectives.''
However, he said future decisions would be “prudent and data-dependent” given the increased risks to the economy and higher-than-expected inflation.
The Fed kept its overnight benchmark interest rate unchanged at its current range of 5.25% to 5.50% at its policy meeting last month, but new economic forecasts suggest that most officials will need to cut rates by three-quarters of a percentage point. It was shown that it was expected. 2024 course.
As of early 2024, the big unknown for markets and economists is when the Fed will start cutting rates. Based on market prices, investors are currently betting that the Fed will start cutting rates at its March meeting, but balance-minded economists think the Fed will continue to cut rates. Off until about the middle of the year.
The Fed's next meeting will be held on January 30-31.
