Fed Policy Makers Anticipate Raising Rates This Year, FOMC Minutes Showed

Brian Turner
05 Jul, 2023
New York City

Almost all participants of the policy making committee gathered for a meeting on June 13-14 agreed that more rate increases may be needed, although at a slower pace. 

All participants noted that with inflation above the central bank's target rate of 2% and the labor market remaining very tight, keeping a restrictive stance on monetary policy would be necessary in achieving the committee's objective, the minutes of the meeting released on Wednesday showed.  

Some participants noted that while the full impact of recent rate hikes have not been felt in the economy,  "several (participants) highlighted the possibility that much of the effect of past monetary policy tightening may have already been realized." 

Despite the easing of supply chain constraints, core goods inflation had moderated since the middle of the last year, core inflation in recent months has slowed "less rapidly than expected." 

Fed  Chairman Jerome Powell has reiterated several times after the announcement of the rate decision that the full impact of 500 basis points increase in interest rates over the last fifteen month have not been felt in the economy so far. 

Participants also noted that inflation was "unacceptably high" and "declines in inflation has been slower than they had expected."  

Committee members noted that nominal wage growth had shown signs of easing but it was still running at a pace that would be inconsistent in achieving the central bank's 2% inflation objective. 

Participants expected that labor market conditions are likely to be in better balance over a longer period of time, easing pressures on wages and prices.