HomePoliticsFed Officials Were Split Over June Rate Pause, Minutes Show - UnlistedNews

Fed Officials Were Split Over June Rate Pause, Minutes Show – UnlistedNews

Federal Reserve officials were unanimous in their decision to raise interest rates earlier this month, but conflicted over whether additional increases would be necessary to control inflation, according to Minutes from the last Fed meeting released on Wednesday.

The Fed voted to raise interest rates by a quarter of a point on May 3, to a range of 5 to 5.25 percent, the 10th consecutive increase since the central bank began its drive to rein in inflation last year. . Although officials left the door open for further rate increases, the minutes make it clear that “several” lawmakers were leaning toward a pause.

“Several participants noted that if the economy evolves in accordance with their current outlook, then further policy reaffirmation may not be necessary after this meeting,” the minutes read.

Still, some officials believed “further policy tightening would probably be warranted at future meetings” as progress in bringing inflation back to the central bank’s 2 percent target could remain “unacceptably slow.”

Policymakers believed that the Fed’s moves over the past year had contributed significantly to tighter financial conditions and noted that labor market conditions were beginning to improve. But they agreed that the labor market was still too hot, given strong gains in job growth and an unemployment rate close to historically low levels.

Officials also agreed that inflation was “unacceptably high.” Although price increases have shown signs of moderating in recent months, the declines were slower than officials had expected, and officials were concerned that consumer spending could remain strong and keep inflation high. Some noted, however, that tighter credit conditions could slow household spending and dampen business investment.

Fed officials believed the US banking system was “robust and resilient” after the collapses of Silicon Valley Bank and Signature Bank earlier this year led to turmoil in the banking sector. While noting that banks may be pulling back on loans, policymakers said it was too early to tell what impact the credit tightening might have on the broader economy.

One source of concern for policymakers was the brinkmanship of the nation’s debt limit, which limits the amount of money the United States can borrow. If the cap is not raised by June 1, the Treasury Department may not be able to pay all of its bills on time, resulting in a default. Many officials said it was “essential that the debt limit be raised in a timely manner” to avoid the risk of severely damaging the economy and rattling financial markets.

The central bank’s next move remains uncertain, and policymakers continue to leave their options open ahead of their June meeting.

“Whether we should raise or skip the June meeting will depend on how the data comes in over the next three weeks,” Christopher Waller, governor of the Federal Reserve, said in a statement. a speech On Wednesday.

Minneapolis Fed President Neel Kashkari at a interview with The Wall Street Journal last week, he said he might support holding rates steady at the June 13-14 meeting to give policymakers more time to assess how the economy is performing.

“I’m open to the idea that we can slow down a bit from here,” he said.

Officials have reiterated that they will continue to monitor incoming data before making a decision. On Friday, the Commerce Department will release a new reading of the personal consumption expenditures index, the Fed’s preferred inflation gauge. Early next month, the federal government will also release new data on job growth for May.

Sara Marcus
Sara Marcushttps://unlistednews.com
Meet Sara Marcus, our newest addition to the Unlisted News team! Sara is a talented author and cultural critic, whose work has appeared in a variety of publications. Sara's writing style is characterized by its incisiveness and thought-provoking nature, and her insightful commentary on music, politics, and social justice is sure to captivate our readers. We are thrilled to have her join our team and look forward to sharing her work with our readers.
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