The US Federal Reserve (Fed) released the minutes of its November meeting on Wednesday (23rd).
The Fed raised interest rates four times in a row at its meeting earlier this month, but the minutes showed that officials were generally comfortable halting front-loading in rate hikes and moving to smaller, more cautious steps. At the same time, several officials believe that the final rate will be slightly higher than previously expected.
At the meeting, officers also discussed the effect of the delay in monetary policy on the economy and inflation, and how long it takes for tightening to start affecting spending and hiring.
“Slowing the pace of rate hikes allows the (Federal Open Market) Committee (FOMC) to assess the status of achieving its goals of maximum employment and price stability, the minutes said, adding that there are uncertain delayed effects of monetary policy actions on the economy. and inflation is That’s one of the reasons why these types of assessments are important.”
Trading in futures contracts linked to Fed interest rates showed investors seeing the probability that the Fed would raise interest rates by 2 yards (50 basis points) at its December 13-14 meeting rose to 80% from 75% before the records are released.
As the prospect of a slowdown in interest rate rises has increased, stocks and bonds have been boosted. At one point the yield on the US 2-year bond, which is more sensitive to interest rate expectations, fell below 4.48 %, and the long-term bond fell. the yield also fell. The US dollar index is getting soft.
Since the November rate meeting, data has pointed to moderate growth in the US economy, with inflation showing signs of slowing even as demand for labor remains strong. The US added 261,000 non-farm jobs last month, and the unemployment rate rose slightly to 3.7%, but was still at an all-time low.
Even acknowledging a slight increase in inflation and the need to continue raising rates, officials discussed the risks that rapid policy tightening could pose to growth and financial stability. Several officials at the meeting believed that slowing rate increases could reduce risks to the financial system, while others said that rate increases should be slowed after inflationary pressures have subsided significantly.
Officials also pointed to the fact that there is much uncertainty about the final interest rate needed to achieve the committee’s goal, suggesting that Fed officials are shifting their focus from the size of interest rate increases at each meeting to the final level of interest rate adjustments.