officers of Federal Reserve (Fed) agreed that they need to shift to a more restrictive stance – and maintain it for some time – to meet the US central bank’s goal of reducing the inflation showed this Wednesday (12) the minutes of last month’s meeting.
The minutes of the September 20-21 meeting showed that many directors of the fed “emphasized that the cost of taking few steps to reduce inflation likely outweighs the cost of taking many steps.”
At the meeting, many of them said they had raised their assessments of the path of interest rate hikes that are likely to be needed to meet the committee’s targets.
That said, several participants in the discussion said it would be important to “calibrate” the pace of further monetary policy tightening with the aim of mitigating the risk of significant adverse effects on the economic outlook.
At last month’s meeting, the fed raised interest rates by 0.75 percentage points for the third time in a row in an effort to reduce inflation from 40-year highs, and the president of fedJerome Powell, later promised that “it will stay that way until we are confident the job is done”.
US central bank policymakers see an urgent need to address inflation, which they fear is in danger of becoming embedded, even if aggressive monetary policy tightening comes at the cost of higher unemployment.
The last few weeks have marked a turning point in the financial market, which in recent months had been clinging to the conviction that the fed would quickly reverse course next year and cut rates in the face of slowing growth and rising unemployment.
authorities of fed have openly rejected that expectation, saying they expect to leave rates high for some time after they finish raising them.
As the markets digested the harsher tone of fedthe result has been crushing losses for US stock markets, soaring government debt yields and a rising dollar, aggravating weak conditions in global markets.
Policymakers’ projections released at last month’s meeting show the benchmark interest rate fedcurrently in the 3% to 3.25% range, the highest since 2008, rising to the 4.25% to 4.50% range by the end of this year and ending 2023 at 4.50% to 4.75% .
The projection for the end of 2022 suggests that a further 75 basis points increase is likely at the remaining two central bank meetings this year.
Recent inflation data showed little or no improvement despite aggressive tightening of the fed and the labor market remains robust with wages rising solidly.
Source: CNN Brasil
Joe Jameson, a technology journalist with over 2 years of experience, writes for top online news websites. Specializing in the field of technology, Joe provides insights into the latest advancements in the industry. Currently, he contributes to covering the world stock market.
