© Reuters
Investing.com – The minutes of the Fed’s September meeting were released moments ago, confirming the majority of Fed members’ inclination during the meeting to raise US interest rates again from the 5.5% levels they agreed to fix at the September meeting.
Highlights of the US Federal Reserve minutes
The majority of the US Federal Reserve members believed that the state of monetary policy in the coming period is characterized by uncertainty and that decisions must be made according to data, not according to a preconceived policy. Many members saw increasing risks of a rise in the US unemployment rate while downplaying the risks of the impact on US economic activity from current monetary policy. The majority of members still support the need to be wary of inflation and a possible rebound in the CPI and other inflation data. The statement says that many members revealed that inflation levels were too high and more and more evidence was needed in order to have confidence in the downward trend of inflation. More than one member indicated that the Fed’s budget reduction may continue even after the start of the process of potential interest rate cuts at the end of 2024. Members believe that below-average employment data and a more sluggish labor market, in addition to economic growth below the normal rate, are two basic factors for reducing high inflation. . Members pointed out that with interest rates approaching their peak, what is most important now, as well as the greatest attention, must shift to how long interest rates must remain high before reductions begin. To benefit from the services of the best InvestingPro stock analyst for free for a limited time: Click here
Click here to view the Fed’s statement in English
Details of the US Federal Reserve minutes
Minutes from the Fed’s meeting reveal differing opinions on the necessity, but there is agreement that it should remain elevated until the moment officials are convinced it is on track to reach the central bank’s 2% target.
A majority of meeting participants believed that one additional increase in the Fed’s target interest rates would be appropriate at a future meeting, while some felt that further increases may not be needed. Despite this, the Federal Open Market Committee decided not to increase interest rates at this meeting.
Regarding the graph reflecting individual committee members’ expectations, about two-thirds of the committee indicated that one more increase would be needed before the end of the year. Since March 2022, the Fed has increased interest rates 11 times, reaching a target range of 5.25% to 5.5%, the highest level in 22 years.
Some central bank officials, including Vice President Philip Jefferson and Regional Presidents Raphael Bostic, Lori Logan and Mary Daly, made remarks suggesting that tightening financial conditions may negate the need for further interest rate increases.
Members who support further increases in interest rates expressed concern about inflation. In fact, the minutes indicated that “most” committee members see upside risks to prices, as well as the possibility of slower growth and higher unemployment rates.
The minutes also noted that the economy has shown more improvement than expected this year, but pointed to a number of risks. For example, the auto workers’ strike was expected to slow growth “slightly” and perhaps increase inflation, but that would only be temporary.
The minutes indicated that consumers are still spending, although officials are concerned about the impact of tightening credit conditions, reduced fiscal stimulus and the resumption of student loan repayments.
Inflation data, particularly in relation to future expectations, generally point to progress towards the central bank’s 2% target, although there are some temporal deviations.
The Fed announced bad news on inflation on Wednesday, as the Labor Department showed that the Producer Price Index, an indicator of inflation at the wholesale level, rose 0.5% in September. Although that number was lower than August’s reading, it beat Wall Street expectations and raised the 12-month Producer Price Index rate to 2.2%, the highest level since April and above the Fed’s desired 2% annual inflation target. Thursday’s CPI is expected to show headline inflation of 3.6% in September, and core inflation excluding food and energy of 4.1%.
Markets now after the release
The American now rises by 0.11% to 105.674 against a basket of foreign currencies. While it rose by 0.51% to $1884.95 per ounce. Spot contracts also rose by 0.59% to $1871.44 per ounce.
Texas WTI crude oil prices fell by 2.22% to $84.08 per barrel. While prices fell to $86.25 per barrel, a fall of 1.6%.
When looking at the American market indices, we find that it rose by 0.19%, while the Industrial Average and S&P 500 fell by 0.14% and 0.03%, respectively.
Currency prices are falling by 2.53% to $26,646.7 per ounce at the present time, while Cryptocurrency prices are falling by 0.74% to $1,553.36.
Geopolitical influences affect prices
Despite the statement’s tough tone, the market’s reaction to the statement was not strong due to the presence of many geopolitical influences that changed the American economic position. The Hamas movement’s attack on the Israeli entity and the renewed conflict in the Middle East once again contributed to the return of some economic concerns regarding oil and commodities, as well as the budget of the United States of America.
The United States of America provides unconditional or specific support to the entity, and more than one official has indicated the possibility of raising the budget to ensure greater financial support for the Israeli entity. These moments require some caution in trading, which enriches the prices of safe havens at these times.
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2023-10-11 18:05:00
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