Federal Reserve officials showed near-unanimous agreement to maintain current interest rates at their meeting last month. However, the minutes revealed a split amongst policymakers regarding future actions, with “several” raising the possibility of further rate hikes. The decision to hold steady was adopted by “almost all” officials to allow assessment of the economy following previous rate adjustments, with only a “couple” favouring an immediate rate cut, according to the meeting summary.
Governors Christopher Waller and Stephen Miran dissented, expressing concerns about potential weakening in the job market. Among the other officials, opinions diverged, with the first explicit mention of potential rate increases if inflation persists above the Fed’s 2 per cent target. Currently, inflation remains approximately one percentage point above this target level.
According to the minutes, “Several participants indicated they could have supported a two-sided description of the (policy) committee’s future interest rate decisions, reflecting the possibility that upward adjustments to the target range for the federal funds rate could be appropriate if inflation remains at above-target levels.” Conversely, “some” felt rates should remain on hold “for some time,” awaiting further inflation and economic data.
A subset of this latter group argued that rate cuts might be inappropriate until there is clear evidence that “disinflation is back on track.” The minutes highlight the ongoing debate within the Federal Reserve as it navigates the complexities of inflation and economic stability.
