WASHINGTON: All members of the US Federal Reserve’s powerful rate-setting committee judged earlier this month that it would be appropriate to keep interest rates high “for some time” in order to tackle inflation, minutes of the meeting released Tuesday show.
On November 1, the Fed announced it was holding interest rates at a 22-year high for a second straight meeting, as it looks to bring inflation firmly down to its long-term target of two percent without damaging the strong economy.
The Fed’s move raised traders’ expectations that it is done hiking interest rates and is moving into a prolonged pause — although Fed Chair Jerome Powell has since said the US central bank is prepared to hike interest rates again, if needed.
“All participants judged that it would be appropriate for policy to remain at a restrictive stance for some time until inflation is clearly moving down sustainably,” towards its two percent target, the Fed said in minutes of the meeting published Tuesday.
Despite the Fed’s decision to aggressively tighten monetary policy since March last year, economic growth has remained strong and the labor market has fairly buoyant — although it has shown some recent signs of slowing.
The strong recent economic data has increased the likelihood of a so-called “soft landing,” whereby the Fed succeeds in tackling inflation without plunging the United States into recession.
Economic forecasts prepared by Fed staff for the most recent rate-setting meeting on October 31 and November 1, “expected fourth-quarter GDP growth to slow markedly from its third-quarter rate,” the Fed said Tuesday.
“All told, however, average GDP growth over the second half of the year was projected to be a little faster than the first half’s pace,” it continued.
The Fed said back in September that it expects the US economy to grow by 2.1 percent this year, and by 1.5 percent in 2024.
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