Skip to content

Fed officials divided over June rate hike or pause, meeting minutes show

Fed officials divided over June rate hike or pause, meeting minutes show

The Federal Reserve raised its benchmark federal funds rate by 25 basis points during its recent meeting on May 2-3, marking the 10th straight hike since March 2022. However, several officials have expressed dissent that the economy and inflation have not slowed, and the members have been unsure whether to continue raising rates as 3 big banks have collapsed since March. The US will report the April Core Personal Consumption Expenditure Price Index on Friday, which was up 4.6% year on year in March and 4.9% year on year in April, but remains well below its 2022 highs. The Federal Reserve policymakers are divided on the most appropriate way to proceed with monetary policy. Fed Chair Jerome Powell suggested that the Fed take time to consider the implications of its actions and avoid restricting credit so severely that it causes a recession.

According to market expectations, the Fed will declare a pause at its June meeting, but numerous officials have stated that the Fed will need to hike rates further to combat persistent inflation. Due to uncertainties about the outlook, Federal Reserve policymakers are leaning against delaying interest rate rises at their June meeting. Policymakers are assessing the potential of a credit crunch in the aftermath of recent banking turbulence against the slower-than-expected progress on inflation and the strong labor market.

Because of the poor progress in decelerating inflation, Governor Christopher Waller indicated he would prefer hiking rates again at the central bank's June or July sessions. The May FOMC meeting predicted a slight recession by year's end, followed by a slow recovery.

Key takeaways from the minutes:

“… effects of the expected further tightening in bank credit conditions, amid already tight financial conditions, would lead to a mild recession starting later this year, followed by a moderately paced recovery.”

“Participants agreed that inflation was unacceptably high.”

“Participants generally expressed uncertainty about how much more policy tightening may be appropriate. Many participants focused on the need to retain optionality after this meeting.”

“… based on their expectations that progress in returning inflation to 2 percent could continue to be unacceptably slow, additional policy firming would likely be warranted at future meetings.”

“Several participants noted that if the economy evolved along the lines of their current outlooks, then further policy firming after this meeting may not be necessary.”

“Almost all participants stated that, with inflation still well above the Committee's longer-run goal and the labor market remaining tight, upside risks to the inflation outlook remained a key factor shaping the policy outlook. A few participants noted that they also saw some downside risks to inflation.”

No comment yet, add your voice below!


Add a Comment

Your email address will not be published. Required fields are marked *

blogs

    20

    Per order + Get Instant Pledge Benefits* + Zero delivery Brokerage

    10

    Per order only (No hidden charges)

    Open FREE Demat Account in less than 10 minutes (Commodity & Currency)

    20

    Per order + Get Instant Pledge Benefits* + Zero delivery Brokerage

    10

    Per order only (No hidden charges)

    Open FREE Demat Account in less than 10 minutes

    20

    Per order + Get Instant Pledge Benefits* + Zero delivery Brokerage

    10

    Per order only (No hidden charges)

    Related Posts

    Ambuja-Cements-to-acquire-Tuticorin-grinding-unit-for-Rs-414-crore
    India’s most trusted cement brand and a leading cement manufacturer and supplier, Ambuja Cements Ltd.,...
    Zomato shares turn multibagger in 1 year
    Zomato shares have given more than 50% return on Year to date basis and over...
    Maruti crossed 2 million units benchmark:highest ever domestic sales and export
    As per the regulatory filing of April 3, Maruti Suzuki's board of directors are set...