Meeting minutes show that Federal Reserve officials have differing opinions on whether to pause rate hikes in June.

Minutes of the May 2-3 meeting, released on Wednesday, showed that Federal Reserve officials agreed to raise interest rates in May, but policymakers disagreed on whether further rate hikes were necessary.

The minutes showed that Fed officials had mixed views on the future direction of interest rates at the last meeting. “Several participants” pointed out that if the economy develops according to their current outlook, there may not be a need for further policy tightening after this meeting, but some officials still believe that “further policy tightening may be needed at future meetings” because progress in returning inflation to the central bank’s 2% target may continue to be “unacceptably slow.”

Previously reported, the Fed raised the benchmark federal funds rate by 25 basis points to between 5% and 5.25% at its May meeting, marking the 10th consecutive rate hike since March 2022 to tackle high inflation.

Disagreement on rate hike path

In the past two weeks, some Fed officials have said that the level of inflation and the slowing of economic activity are not enough to justify ending the rate hikes.

Powell said at a central bank-hosted meeting last week: “As policy becomes more stringent, the risks of doing too much versus doing too little become more balanced.”

The minutes showed that Fed staff continued to expect a recession to begin around the fourth quarter of this year as the lagged effects of rate hikes and bank pressures slowed economic activity.

Fed Governor Christopher Waller told The Wall Street Journal at a meeting in Santa Barbara, California, this week that it was a difficult decision whether the central bank should raise rates in June or wait until the end of July’s meeting.

Waller said: “We need to remain flexible before making the best decision in June.”

Waller said that based on current economic activity data, the Fed has not made much progress on inflation. He expects that economic and lending activity data in the next two months will clearly show that the rate needs to remain higher than current levels. If the upcoming data does not show further signs of economic activity and inflation slowing, a rate hike in June would be appropriate.

The Fed’s benchmark rate will rise to a 22-year high if it raises rates again. At the same time, Waller also mentioned that caution may be necessary, even if current and upcoming data support a rate hike next month, due to increased uncertainty about how bank financing costs have risen since three mid-sized banks collapsed in March. Waller said: “Another rate hike, coupled with sudden and unexpected tightening of credit conditions, could rapidly push the economy down in an unwelcome way. If people are concerned enough about this downside risk, then prudent risk management would suggest not raising rates at the June meeting, but rather leaning towards a rate hike in July based on upcoming inflation data.” If credit and banking conditions persist until July, continuing to raise rates at the end of the July central bank meeting “is likely to be appropriate policy.”

Last week, Neel Kashkari, president of the Minneapolis Federal Reserve Bank, told the Wall Street Journal that he might support keeping rates unchanged at the June 13-14 meeting to give policymakers more time to assess economic developments.

According to futures market pricing, the market expects the May rate hike to be the last of the cycle, and the Fed may cut rates by about 25 basis points before the end of the year. This expectation is accompanied by the assumption that the economy will slow down and may fall into recession, and that the inflation rate will fall to near the Fed’s 2% target.

Economic data shows that although inflation is still far above the central bank’s target, it is declining. The core inflation rate, measured by the Fed’s preferred personal consumption expenditure index, excluding food and energy, grew 4.6% year-on-year in March, hovering at this level for several months.

The busy labor market has been a source of pressure on prices, with a 3.4% unemployment rate reaching a low not seen since the 1950s. Wages have also been rising, up 4.4% from April of last year, according to a research report by former Fed Chairman Ben Bernanke earlier this week, representing his former colleagues’ entry into the next stage of the inflation struggle.

The next steps of the US central bank are still uncertain, and policymakers continue to hold their options until the June meeting. On Friday, the US Department of Commerce will release the latest data on personal consumption expenditure index, which is the preferred inflation indicator of the Federal Reserve. Next month, the federal government will also release new data on job growth in May.

Author: BlockingBitpushNews Mary Liu

For more information, please join:

Blocking Twitter:

Blocking TG exchange group:

Blocking TG subscription:

This article is from Blocking:, please indicate the source when reprinting

Explanation: All articles from Blocking are only the author’s point of view and do not constitute investment advice
Original link:

Like what you're reading? Subscribe to our top stories.

We will continue to update Gambling Chain; if you have any questions or suggestions, please contact us!

Follow us on Twitter, Facebook, YouTube, and TikTok.


Was this article helpful?

93 out of 132 found this helpful

Gambling Chain Logo
Digital Asset Investment
Real world, Metaverse and Network.
Build Daos that bring Decentralized finance to more and more persons Who love Web3.
Website and other Media Daos

Products used

GC Wallet

Send targeted currencies to the right people at the right time.