Fed Minutes Suggest Interest Rates To Remain Higher For Longer
May 22 2024 - 10:25AM
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With recent data not increasing confidence inflation is moving
sustainably toward 2 percent, the minutes of the latest Federal
Reserve meeting suggest officials expect to maintain interest rates
at current levels longer than previously thought.
The minutes of the April 30-May 1 meeting, released Wednesday
afternoon, said participants highlighted disappointing readings on
inflation over the first quarter and indicators pointing to strong
economic momentum.
The participants subsequently assessed that it would take longer
than previously anticipated for them to gain "greater confidence"
inflation is moving sustainably toward 2 percent.
With Fed officials repeatedly saying they need "greater
confidence" inflation is slowing before they cut rates, the minutes
said participants discussed maintaining the current restrictive
policy stance for longer.
While officials also discussed reducing policy restraint in the
event of an unexpected weakening in labor market conditions,
various participants also mentioned a willingness to raise rates
further should risks to inflation materialize in a way that such an
action became appropriate.
Meanwhile, the participants reiterated the future path of
interest rates would depend on incoming data, the evolving outlook,
and the balance of risks.
The Fed's next monetary policy meeting is scheduled for June
11-12, with the central bank widely expected to again leave
interest rates unchanged.
While the likelihood rates will be lower by September remains
high, the chances have fallen to 70.6 percent from close to 90
percent last week, according to CME Group's FedWatch Tool.
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