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(Alliance News) – Most US Federal Reserve policymakers thought that slowing the pace of interest rate increases would “soon” be appropriate, according to minutes released on Wednesday by the US Federal Reserve.
In its November meeting, the central bank lifted interest rates by 75 basis points, as expected, to 3.75% to 4.00% from 3.00% to 3.25%.
“A substantial majority of participants judged that a slowing in the pace of increase would likely soon be appropriate,” the November meeting minutes read.
The minutes said that a slower pace would better allow the Federal Open Market Committee to “assess progress toward its goals of maximum employment and price stability”.
“The uncertain lags and magnitudes associated with the effects of monetary policy actions on economic activity and inflation were among the reasons cited regarding why such an assessment was important,” the minutes continued.
The summary said that “a few” participants noted that slowing the pace of increase could reduce the risk of instability in the financial system.
Other members said that it could be “advantageous to wait until the stance of policy was more clearly in restrictive territory and there were more concrete signs that inflation pressures were receding significantly” before slowing the pace of policy rate increases.
Members of the FOMC agreed that it seeks to achieve maximum employment and inflation at the rate of 2% over the longer run. In support of these goals, all the members agreed to lift the target range by 75 basis points in the November meeting.
“Members anticipated that ongoing increases in the target range would be appropriate in order to attain a stance of monetary policy sufficiently restrictive to return inflation to 2 percent over time,” the minutes said.
Looking to the future, the minutes said members agreed that, in determining the pace of future increases in the target range, they would “take into account the cumulative tightening of monetary policy, the lags with which monetary policy affected economic activity and inflation, and economic and financial developments.”
By Heather Rydings; heatherrydings@alliancenews.com
Copyright 2022 Alliance News Limited. All Rights Reserved.
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