After a scramble this year to raise interest rates, the Federal Reserve this month shifted to a more subtle approach, seen as a happy medium between policymakers more concerned about inflation and those fearful that more sharp rate hikes could shake the economy or stress the markets.
The minutes of the November 1-2 meeting, which will be released on Wednesday (23), may show the size of any disagreement that has begun to emerge in the central bank, as the Fed ends the effort to raise interest rates and begins to evaluate smaller steps for a possible stop.
The Fed’s policy statement released on Nov. 2 tried to fill in any gaps, promising “continued increases” until rates are “tight enough” to rein in inflation, while saying the size of future hikes will take account for the “cumulative tightening” so far, as well as the fact that the impact of these increases may take some time to be felt.
What’s not clear: How far Fed officials feel they need to raise rates, and how strongly the sense of risk is shifting to concerns about “overshooting” and doing more damage to the economy than is necessary to control inflation. .
The minutes “may show some widening differences between officials who want to take a wait-and-see approach and those … who continue to present a more definitive view that financial conditions will need to be tightened,” Citi analysts wrote Sunday. .
At this point, Fed Chair Jerome Powell and even the most traditionally “dovish” officials remain aligned with further increases, and Powell said the risks are of doing too little to correct the worst bout of inflation since the 1980s.
Source: CNN Brasil
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