“Debate Over Raising Key Interest Rates: What’s Next for the US Federal Reserve?”

US Federal Reserve officials were divided at their latest meeting on where they are going with interest rates, with some seeing the need for more hikes, while others expect a slowdown in growth that would eliminate the need for further tightening.

This is shown by the minutes of the meeting, published today, writes CNBC, quoted by Investor.bg.

Although the decision to raise the benchmark interest rate by a quarter of a percentage point was unanimous, summary notes from the meeting revealed disagreement over what the next move should be, with a bias towards a less aggressive policy.

Ultimately, the Federal Open Market Committee, which sets interest rates, voted to remove a key phrase from its post-meeting statement that said “further tightening of policy may be appropriate.”

The Fed now appears to be moving toward a more data-driven approach, where a myriad of factors will determine whether the rate-hike cycle continues.

“Overall, participants expressed uncertainty about how much policy tightening might be appropriate,” the minutes read.

“Many participants focused on the need to retain various options after this meeting.”

Essentially, the debates boil down to two scenarios. One that has been championed by “some” members, suggesting that progress in slowing inflation is “unacceptably slow” and will require further rate hikes.

The other, supported by “several” committee members, sees a slowdown in economic growth where “further policy tightening may not be necessary after this meeting.”

The text does not mention names or the number of people behind the words “several” and “some”. However, in the language of the Fed, “several” is considered more than “some.” The minutes noted that members agreed that inflation was “significantly accelerated” relative to the Fed’s target.

Despite differences in expectations for the future, there seems to be clear agreement that the path the Fed has taken, raising rates 10 times since March 2022, is no longer so certain.

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