The Fed released the minutes of the Federal Open Market Committee (FOMC) meeting held on January 31-February 1.
The minutes of the last meeting, where the policy rate was increased by 25 basis points to the range of 4.50-4.75%, the highest level in 16 years, showed that almost all Fed officials agreed to reduce the rate of increase.
“Almost all officials at the meeting agreed that it was appropriate to increase the target range for the federal funds rate by 25 basis points,” the minutes said.
In the Fed’s minutes, many of these officials observed that further slowing the pace of rate hikes would allow them to better assess the economy’s progress toward maximum employment and price stability goals.
It was noted in the minutes that several officials were in favor of increasing the interest rate by 50 basis points at the last meeting, and taking into account the views of these officials on the risks to timely price stability, a larger increase would bring the interest rate closer to the levels they believe would be able to achieve a sufficiently restrictive stance.
Upside risks to inflation remain a key factor shaping the policy outlook
In the minutes, it was noted that inflation is still well above the long-term target, pointing out that Fed officials generally said that upside risks to inflation continue to be an important factor shaping the policy outlook, and that a restrictive policy stance should be maintained until inflation clearly drops to 2 percent in terms of risk management. was stated to be appropriate.
It was stated in the minutes that some officials pointed out that a policy stance that has proven to be insufficiently restrictive may halt the recent progress in easing inflationary pressures, and that this may also cause inflation to remain above the 2 percent target for a long time.
The minutes noted that officials agreed that the Committee had made significant progress in bringing monetary policy toward a sufficiently restrictive stance over the past year.
Inflation remains well above the long-term 2 percent target and the labor market remains tight, although there are signs that the cumulative effect of the tightening of the monetary policy stance is starting to soften inflationary pressures, the bank’s minutes said.