Fed minutes cite lower inflation risks, concern about 'overly restrictive' policy
By Howard Schneider
WASHINGTON (Reuters) -Federal Reserve officials appeared increasingly convinced last month that inflation was coming under control, with diminished «upside risks» and growing concern about the damage «overly restrictive» monetary policy might do to the economy, according to the minutes from the U.S. central bank's Dec. 12-13 meeting.
As a result, «almost all participants indicated that… a lower target range for the federal funds rate would be appropriate by the end of 2024,» said the minutes, which were released on Wednesday, with «a number of participants» highlighting increased uncertainty about how long strict monetary policy would need to be maintained given the progress achieved on lowering inflation.
In a firm nod to their progress in easing pricing pressures, policymakers also, for the first time since June 2022, did not use the phrase «unacceptably high» to describe inflation.
U.S. stocks slightly pared losses following the release of the minutes but were still down for a second straight day, while the U.S. dollar added to gains against a basket of currencies. U.S. Treasury yields were little changed.
Traders of interest rate futures largely stuck to bets that the central bank's Federal Open Market Committee would start to cut rates in March, with the policy rate seen ending the year in the 3.75%-4.00% range, 1.5 percentage points lower than where it is now.
«There is nothing in these minutes to dissuade us that the Fed will start to cut interest rates from this March onwards,» said Paul Ashworth, chief North America economist at Capital Economics.
'TRADEOFF'
«A few» Fed officials said they felt the central bank was approaching a point where it may face a «tradeoff» between its dual goals of
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