Fed minutes, risks of “acting too quickly” with rate cuts

US rates Fed minutes towards another increase

(Finance) – Members of the Federal Open Market Committee (FOMC) of the US Central Bank believe that the badger be official”probably at its highest for this tightening cycle“. This is what emerges from the minutes of the last Fed meeting, which took place on 30-31 January 2024.

Policymakers have pointed to declining inflation seen throughout 2023 and growing signs of a better balance between supply and demand in product and labor markets as informing that vision. In general, meeting participants stressed that they did not expect that it would be appropriate to reduce the target range for the rate until they had “gained more confidence that inflation was moving sustainably towards 2%.”

In discussing risk management, participants noted that while the risks to achieving the Committee’s employment and inflation targets were shifting towards a better balance, remained very alert to inflation risks. Notably, they felt that upside risks to inflation had diminished, but noted that inflation was still above the long-term target.

Participants highlighted “the uncertainty associated with the duration of maintaining a restrictive monetary policy stance” and “most of the participants underlined i you risk acting too quickly to ease the political stance and stressed the importance of carefully evaluating incoming data to judge whether inflation is sustainably reducing to 2%.”

A couple of participants, however, highlighted the downside risks to the economy associated with maintaining a policy overly restrictive for too long“, we read in the minutes.