The US Federal Reserve (Fed) released the minutes of its November meeting on Wednesday (23).
The Fed raised interest rates four times in a row at its meeting earlier this month, but minutes showed officials were generally comfortable with halting the frontloading of rate hikes and moving to more strides. smaller and more cautious. At the same time, several officials believe that the terminal fee will be slightly higher than previously expected.
During the meeting, officials also discussed the impact of the lag in monetary policy on the economy and inflation, and how long it takes for the tightening to start affecting spending and hiring.
“Slowing the pace of rate hikes allows the (Federal Open Market) Committee (FOMC) to assess the status of the achievement of its maximum employment and price stability goals, the minutes said, adding that the uncertain deferred effects of policy actions monetary policy on the economy and inflation are. That’s one reason why these kinds of assessments are important.”
Trading in Fed interest rate futures contracts showed that investors saw the likelihood of the Fed raising interest rates by 2 yards (50 basis points) at its December 13-14 meeting, rising to 80% since 75% before the publication of the minutes.
As the possibility of a slowdown in interest rate hikes has increased, both stocks and bonds have been pushed. The US 2-year bond yield, which is more sensitive to interest rate expectations, was once fell below 4.48%, and the long-term stock yield also declined.dollar indexslow down.
Since the November rate meeting, data has pointed to modest growth in the US economy, with inflation showing signs of slowing even as labor demand remains strong. The US added 261,000 nonfarm jobs last month and the unemployment rate rose slightly to 3.7%, but it was still at an all-time low.
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While acknowledging little progress on inflation and the need to continue raising rates, officials discussed the risks that rapid policy tightening could pose to growth and financial stability. Several officials at the meeting believed that slowing rate hikes could reduce risks to the financial system, while others said the pace of rate hikes should slow after inflationary pressures ease significantly.
The officials also pointed out that there is a lot of uncertainty about the terminal interest rate needed to meet the committee’s goal, suggesting that Fed officials are shifting their focus from the magnitude of interest rate hikes at each meeting to the level end of interest rate adjustments.
