The Federal Reserve ended 2022 with a firm pledge at its December policy meeting that rates will continue to rise this year, but at a slower pace and perhaps only by another 0.75 percentage point.
The minutes of the next meeting, which will be released at 4 pm this Wednesday (16), may provide more information on how the final phase of the current monetary tightening cycle will develop and how much Fed officials are starting to assess the risks to the economic growth in the face of its main concern, high inflation.
The general tone of the minutes should show that inflation still has the highest attention among the authorities. It has been slowing for several months, but in November the Fed’s preferred inflation gauge, the PCE index, remained rising at an annual rate of 5.5%, more than double the US central bank’s 2% target.
The minutes “will lean against premature easing” and keep the focus on the likelihood that rates will rise further and remain high, Derek Tang, an economist at LH Meyer, wrote on Tuesday.
But the details of the document, with its descriptions of different views and the approximate sizes of the groups of officials who defend them, may show that the Fed’s internal deliberations enter a new phase in which risks to economic growth and jobs win out. more weight.
Fed officials’ forecasts released on Dec. 14 showed near-unanimity on where interest rates will go in 2023, with 15 out of 19 policymakers expecting the rate to rise by 0.75 pp or 1 pp cumulative over the next few months, a narrow range that would see the current cycle end with that rate around 5.25% or 5.5%.
But for 2024 projections diverge dramatically, with one authority seeing the interest rate remain at 5.625% and another seeing it reduced to 3.125%, in an economy that may still be flirting with or going through a recession.
“The FOMC seems united in having the rate above 5%, but it is quite divided on its exit strategy; how long to hold and how deeply and quickly to ease on the other side,” Tang wrote, referring to the Federal Open Market Committee, which sets the central bank’s monetary policy.
Source: CNN Brasil
A journalist with over 7 years of experience in the news industry, currently working at World Stock Market as an author for the Entertainment section and also contributing to the Economics or finance section on a part-time basis. Has a passion for Entertainment and fashion topics, and has put in a lot of research and effort to provide accurate information to readers.
