A path forward amid the banking crisis: Fed minutes By Investing.com

© Reuters.

Investing.com – Federal Reserve officials “accepted” that future rate hikes were not certain and decided to keep policy unchanged while inflation remained stable and the banking crisis was uncertain, according to the Fed’s May minutes. The 2-3 meeting was shown on Wednesday.

When discussing the policy, the participants agreed that looking at the results of the immediate increase in the monetary policy and the possible effects on the economy due to the increase in debt, the further increase in the number may be appropriate. after the meeting was confirmed,” the Fed minutes showed.

Following its previous meeting on May 2-3, the Federal Open Market Committee raised its target rate to 5% to 5.25%, adding to the prospect of a pause by removing previous language in its monetary policy statement that said “reaffirmation of certain points may be appropriate.”

At his press conference following monetary policy, Federal Reserve Chairman Jerome Powell said the change in language represented a “significant change,” though he paused for a moment.

A few weeks after the decision, Mr. Powell indicated that inflation was so hot that it would not rise next month, although he added that the level of inflation given so far and the possibility of a banking crisis would tighten lending standards. to be considered in future decisions.

A rate cut is “very far” from the Fed’s goal, Powell said at the Fed’s research meeting on May 19. But he added that policymakers “have not made a decision” about raising rates at the next meeting in June.

Many fed members express the need to remain flexible in order to respond to incoming requests.

“Many of the participants looked at the importance of keeping options after this meeting. Some responded that, given the expectations that the improvement of the inflation rate to 2 percent may continue to be unacceptably slow, the stability of the additional policies may be appropriate in future meetings , ” moment showed.

But “most of the participants realized that if the economy is going according to their vision, then reconfirming the policy after the meeting will not be necessary,” according to the minutes.

Hawkish-leaning members of the Fed, meanwhile, have been vocal in recent days about the need for further hikes.

President of St. Louis Fed’s James Bullard said he expects the central bank to raise interest rates twice this year to curb inflation.

“I’m thinking of making two more moves this year — exactly what they’re going to be this year I don’t know — but I’ve generally been making announcements recently,” Bullard told the American Gas Association’s finance committee earlier this week.

The odds of a June recession continued to decline, standing at 65% from 67% last week, according to Investing.com’s Fed rate monitoring tool.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *