Most Fed officials say slower rate hike pace appropriate 'soon'

Most Fed officials say slower rate hike pace appropriate 'soon'

A slower pace of interest rate hikes will allow better assessment of progress towards the US Federal Reserve's goals
A slower pace of interest rate hikes will allow better assessment of progress towards the US Federal Reserve's goals. Photo: Tolga Akmen / AFP/File
Source: AFP

A majority of US Federal Reserve policymakers found that a slower pace of interest rate hikes would "likely soon be appropriate," the central bank said Wednesday.

The Fed has embarked on an aggressive path to cool demand and bring down prices as inflation in the world's biggest economy surged to the highest level in decades, raising the benchmark borrowing rate six times this year.

With inflation hovering around 7.7 percent, the latest policy meeting in early November produced a fourth consecutive three-quarter point interest rate hike to a range between 3.75 and four percent, a major rise.

But "a substantial majority of participants judged that a slowing in the pace of increase would likely soon be appropriate," according to minutes of the November meeting released Wednesday.

"A slower pace in these circumstances would better allow the committee to assess progress toward its goals of maximum employment and price stability," the minutes said.

Read also

Asian markets rise on rate hopes but China Covid casts shadow

Participants of the meeting noted that it would take time for the full effects of policy to be realized, and a few found that easing the pace of interest rate hikes could lower risks of instability in the financial system.

PAY ATTENTION: Click “See First” under the “Following” tab to see YEN.com.gh News on your News Feed!

Few signs of abating

But policymakers agreed at the meeting that inflation was "unacceptably high" and well above their longer-run goal of two percent.

Annual consumer inflation came in at 7.7 percent in October, down from a blistering high 9.1 percent in June but still underscoring a heightened cost of living.

With surging consumer prices showing "little sign thus far of abating," some officials found that policy might have to be tightened more than anticipated.

Despite signs of slowing activity as the Fed's rate hikes trickled through the economy, officials saw that the labor market remained tight, with elevated wage growth.

Read also

UK public finances worsen, as OECD warns on outlook

New home sales posted a surprise increase last month as well, while demand for big-ticket American-made goods picked up more than expected, data released on Wednesday showed.

But a growing number of voices, including some Fed officials, have advocated for smaller steps in the coming months.

Last week, Federal Reserve Governor Christopher Waller said signs of easing inflation pressures and a slowing US economy could allow the central bank to dial back its pace of rate hikes.

Fed Vice Chair Lael Brainard also said last week that it would likely be "appropriate soon" for the Fed to slow the pace of rate increases, adding that it would take time for tightening so far to flow through to the economy.

New feature: Сheck out news that is picked for YOU ➡️ find “Recommended for you” block on the home page and enjoy!

Source: AFP

Authors:
AFP avatar

AFP AFP text, photo, graphic, audio or video material shall not be published, broadcast, rewritten for broadcast or publication or redistributed directly or indirectly in any medium. AFP news material may not be stored in whole or in part in a computer or otherwise except for personal and non-commercial use. AFP will not be held liable for any delays, inaccuracies, errors or omissions in any AFP news material or in transmission or delivery of all or any part thereof or for any damages whatsoever. As a newswire service, AFP does not obtain releases from subjects, individuals, groups or entities contained in its photographs, videos, graphics or quoted in its texts. Further, no clearance is obtained from the owners of any trademarks or copyrighted materials whose marks and materials are included in AFP material. Therefore you will be solely responsible for obtaining any and all necessary releases from whatever individuals and/or entities necessary for any uses of AFP material.