U.S. Federal Reserve officials expressed concern about the recent lack of progress on inflation and remained willing to raise interest rates if conditions warranted as of their two-day meeting that ended May 1.
Minutes of the meeting released Wednesday showed that “many” officials expressed uncertainty about how much today’s interest rate setting – 5.3 percent, a significant increase from near zero at the start of 2022 – is weighing on the economy.
Officials have made clear that they expect to keep interest rates unchanged for now in the hope that they will provide enough of a brake on economic growth to curb inflation over time. And central bankers have repeatedly stressed that they expect the next rate move to be a cut, not a hike.
But policymakers have not ruled out a future rate hike, instead assessing it as a possibility if inflation proves surprisingly rapid. The minutes underlined this reservation.
“Various participants expressed a willingness to further tighten policy if necessary,” the press release said.
Stock indexes fell after the minutes were released as investors feared the Fed’s caution on inflation could raise interest rates.
Fed officials have received some comforting news since their last meeting: Inflation cooled slightly in April, a sign that surprisingly stubborn price pressures earlier in the year won’t necessarily become a lasting trend. Policymakers have continued to emphasize that they are happy to keep interest rates at today’s levels for an extended period while they wait for price increases to fully slow.
“We just need to gather more information,” Loretta Mester, president of the Federal Reserve Bank of Cleveland, said in an interview this week at the Federal Reserve Bank of Atlanta’s financial markets conference in Florida. She noted that supply chain improvements had significantly reduced inflation last year and said that was unlikely to be repeated this year.
When it comes to curbing price increases enough to lower interest rates, “I think it’s going to take longer than I thought,” Susan Collins, president of the Federal Reserve Bank of Boston, also said in an interview in Florida. “I think the policy is restrictive, but I think it is only moderately restrictive.”
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2024-05-22 18:56:22
www.nytimes.com
