Fed officials were unanimous in their decision to raise rates earlier this month, but disagreed over whether more rate hikes were necessary to keep inflation in check, the newspaper said. Minutes from the last Fed meeting Released Wednesday.
The Fed on May 3 decided to raise interest rates by half a percentage point to the 5% to 5.25% range, the 10th straight hike since the central bank launched its anti-inflation campaign last year. Officials left the Fed open to more rate hikes, but the minutes showed “several” policymakers leaning against it.
“Several participants noted that if the economy develops in line with current projections, there may be no need for further consolidation of policy after this meeting,” the minutes said.
Still, progress on returning inflation to the central bank’s 2% target could be “unacceptably slow”, with some officials saying “further policy tightening is likely to be justified at future meetings.” I believe.
Policymakers believe the Fed’s actions over the past year have played a major role in tightening financial conditions, noting that labor market conditions are starting to ease. But they agreed that the labor market was still too hot given the strong job growth and the near-historically low unemployment rate.
Officials also agreed that inflation was “unacceptably high.” Inflation has shown signs of slowing in recent months, but the decline has been slower than officials had expected, with officials worried that consumer spending remains strong and inflation could remain high. . But some say tighter credit conditions could slow household spending and curb business investment.
Fed officials believed the U.S. banking system was “healthy and resilient” after the failures of Silicon Valley and signature banks wreaked havoc on the banking sector earlier this year. Banks may be holding back lending, policymakers said, but said it was too early to tell how big a credit tightening would affect the economy as a whole.
One of the concerns of policymakers was the brinkmanship over the national debt limit, which caps the amount of money the U.S. can borrow. If the cap is not raised by June 1, the Treasury Department will be unable to pay all bills on time and could default. Many officials said it was “essential to raise the debt ceiling in a timely manner” to avoid the risk of severely damaging the economy and disrupting financial markets.
The central bank’s next move remains uncertain, and policymakers remain open to options for their June meeting.
“Whether we should raise rates at the June meeting or skip it depends on what the data looks like over the next three weeks,” said Federal Reserve Governor Christopher Waller. speech on wednesday.
Minneapolis Fed President Neil Kashkari said: Wall Street Journal interview He said last week that he might support keeping rates unchanged at the June 13-14 meeting to give policymakers time to assess the economic situation.
“I’m positive about the idea that we can go a little more slowly from here,” he said.
Officials reiterated that they will continue to monitor incoming data before reaching a decision. On Friday, the Commerce Department will release the latest personal consumption expenditure index, which the Fed recommends as a measure of inflation. Early next month, the federal government will also release new data on job growth in May.
