Fed sees ‘significant’ inflation risk that could mean more hikes
Federal Reserve officials at their last meeting largely remained concerned that inflation would fail to recede and suggested they may continue raising interest rates.
“Most participants continued to see significant upside risks to inflation, which could require further tightening of monetary policy,” according to the minutes of the central bank’s July 25-26 policy meeting published Wednesday in Washington.
“Some participants commented that even though economic activity had been resilient and the labor market had remained strong, there continued to be downside risks to economic activity and upside risks to the unemployment rate,” the Fed said.
Policymakers raised the target range for their benchmark rate by a quarter point at the meeting, to 5.25% to 5.5%, the highest level in 22 years. That marked a resumption of increases after they left rates unchanged at the previous gathering for the first time since early 2022.
While quarterly projections last updated in June showed most officials at the time favored two more increases in 2023, Chair Jerome Powell emphasized after the July decision that the Fed would take things meeting by meeting.
“We intend again to keep policy restrictive until we’re confident that inflation is coming down sustainably to our 2% target, and we’re prepared to further tighten if that is appropriate,” Powell told reporters on July 26.
Following the release of the minutes, Treasury yields remained higher, while the S&P 500 index extended its losses on the day and the dollar added to its gains.
Public remarks from officials on the Federal Open Market Committee since the July meeting suggest the strong degree of consensus underpinning the aggressive tightening campaign of the last year and a half may be
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