Officials at the December 13-14 FOMC meeting agreed We will continue to raise credit costs in 2023, but gradually limit economic growth risks.
The FOMC meeting declared:
“No participants expected it would be appropriate to start lowering the Federal Funds interest rate target in 2023.”
Policy makers remained concerned about slowing the pace of inflation, according to the minutes of the meeting released on 4 January.
Drawing on past experience, attendees cautioned against premature monetary policy easing given persistently high inflation. Conference attendees confirmed there are many uncertainties abroad over inflation, including China’s easing of its zero-COVID policy, Russia’s continuation of its war on Ukraine, and the impact of tightening sync policies by major central banks. .
But officials argued that financial conditions had eased in the period following months of “tightening” and had made “substantial progress.”
At the meeting, officials appeared to be considering a lower rate hike on 31st January/31st February. One meeting, as the session revealed:
“Most participants stressed the need to maintain flexibility and selectivity as policies move toward more restrictive stances.”
Moreover, central bank communications showed the slowing pace of policy rate hikes contributed to “improving sentiment,” officials said. The Commission also believes that:
“If the pace of rate hikes slows at this meeting, the Committee will be able to assess progress in the economy … as monetary policy approaches a sufficiently restrictive stance.”
Nonetheless, authorities continued to accept higher-than-expected interest rates if inflation persisted.
The minutes stress that investors and the public should not interpret a move to a smaller rate hike as a weakening of the central bank’s commitment to bring inflation back to 2%.
At the Fed’s meeting last month, the Fed raised interest rates by 50 basis points. This is down from consistent rate hikes of 75 basis points throughout 2022.US inflation rate 7.1% As of November 2022, it is well ahead of the Fed’s target.