Federal Reserve consensus set on keeping rates higher for longer

investmentweek.co.uk:

At the start of this month, the central bank held interest rates for the second successive meeting, seemingly bringing an end to the hiking cycle.

Minutes from the Fed's last monetary policy decision meeting released on Tuesday (21 November) showed no indication that rates would either be hiked or cut in the near future, instead arguing it was «critical that the stance of monetary policy be kept sufficiently restrictive».

«Participants noted that inflation had moderated over the past year but stressed that current inflation remained unacceptably high and well above the committee's longer-run goal of 2%,» the minutes said.

«They also stressed that further evidence would be required for them to be confident that inflation was clearly on a path to the committee's 2% objective.»

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At the start of this month, the central bank held interest rates for the second successive meeting, raising hopes that its hiking cycle aimed to stop high inflation had come to an end.

While some had expected the Fed to begin discussing the possibility of cutting interest rates in the meeting, this was completely absent, with the committee members instead emphasising the importance of data-dependence.

«All participants agreed that the committee was in a position to proceed carefully and that policy decisions at every meeting would continue to be based on the totality of incoming information,» the minutes added.

Since the meeting at the start of this month, data revealed that US inflation came below expectations in October, sitting at just 3.2%.

This solidified the market's view that there would be no more hikes, instead believing that the Fed would begin cutting interest rates by May, placing