US Federal Reserve minutes show officials rally around higher-for-longer rates
Federal Open Market Committee gathering ending May 1 showed that, while participants assessed that policy was “well positioned," various officials mentioned a willingness to tighten policy further if warranted. “Participants noted disappointing readings on inflation over the first quarter," according to the minutes released Wednesday in Washington.
The minutes showed “that it would take longer than previously anticipated for them to gain greater confidence that inflation was moving sustainably toward 2%."Officials also discussed holding rates steady for longer “should inflation not show signs of moving sustainably toward 2% or reducing policy restraint in the event of an unexpected weakening in labor market conditions," the minutes said.Following a first-quarter pickup in inflation, Fed officials have said they will hold interest rates at a 23-year high for longer than initially anticipated. Chair Jerome Powell said at his May 1 press conference that it’s clear monetary policy is restrictive and that over time he expects the current level of rates to bring inflation down to the central bank’s 2% target.
He added it was unlikely the Fed’s next move would be a hike.“We’ll need to be patient and let restrictive policy do its work," he reiterated at an event in Amsterdam on May 14.The minutes offered a more nuanced picture. Though officials viewed policy as generally restrictive, policymakers pointed to the possibility of high interest rates having a smaller effect on the economy than in the past.
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