Debate over rate moves at US central bank is shifting

economictimes.indiatimes.com:

Federal Reserve officials close in on the end of their tightening campaign, the debate is shifting from how high interest rates need to go to how long they should stay elevated. Inflation pressures are easing, which could give policymakers room to keep interest rates at or near current levels for the time being. Still, price gains remain well above the central bank's 2% target, making policymakers hesitant to declare victory. Introducing the discussion over how long officials may keep rates steady even if inflation continues to decelerate could help them push back on expectations for rate cuts and allow them to keep putting downward pressure on the economy. «This is the policy dimension that they will likely focus on the most going forward: Not how much higher to take the federal funds rate, but how long to keep it at these levels,» said Brian Sack, a former senior Fed official who earlier this year left D.E. Shaw & Co. after about a decade as head of the investment firm's global economics group. «There's still a lot of scope to tighten financial conditions in that way, if they wanted to.» Fed officials unanimously raised their benchmark rate last month to a target range of 5.25% to 5.5%, the highest level in 22 years. Minutes from that gathering — set for release on Wednesday afternoon — could provide more insight into whether most policymakers believe those increases have already worked their way through the economy or if they still expect to see more effects.

Recent data suggest inflation is moving in the direction policymakers favor. The core consumer price index, which excludes often-volatile food and energy costs, rose 0.2% in July for a second month, marking the smallest back-to-back gains in more