It was emphasized in the minutes of the meeting of the US Federal Reserve (FED) on December 13-14 that the slowing interest rates would allow the central bank to evaluate the progress in terms of inflation and employment. None of the participants considered the interest rate cut appropriate in 2023.
The Fed released the minutes of the Federal Open Market Committee (FOMC) meeting held on December 13-14, 2022.
The minutes of the last meeting, in which the policy rate was raised by 50 basis points to a 15-year high of 4.25-4.50 percent, show that the Fed will keep interest rates at higher levels for a while.
While emphasizing the importance of following a restrictive monetary policy while inflation remains “unacceptably high”, “Members generally observed that a restrictive policy stance should be maintained until the incoming data gives confidence that inflation is on a sustained downward path to 2 percent, it will take some time. ” it says.
Interest rate cuts are not expected to be appropriate in 2023.
While it is important to clearly communicate that the slowdown in interest rate increases is not an indication of any weakening in the Committee’s determination to achieve its price stability target, it is written that “No member envisaged that it would be appropriate to start lowering the federal funds rate target range in 2023”.
“Given the persistent and unacceptably high level of inflation, several members commented that historical experience has warned against premature easing of monetary policy,” the minutes read.
While it was stated that the upside risks to the inflation outlook in general remained an important factor shaping the policy outlook, most members stressed the need to maintain flexibility and optionality while shifting policy to a more restrictive stance, in light of the increasing uncertainty regarding both inflation and real economic activity outlook. ” evaluation is underway.