The Fed gives new signals, US interest rates will be like this

Jakarta, CNBC Indonesia – Officials of the central bank of the United States (USA), Federal reserveagain he gave the signal falcon related to monetary policy. Officials expect interest rates to be higher for “some time to come” to fight inflation until further progress is made.

This can be seen in the December Federal Open Market Committee (FOMC) meeting minutes, which were released on Wednesday (4/1/2023) local time. At a meeting where policy makers raised the key interest rate by half a percentage point, they voiced the importance of maintaining tightening policies as inflation remains very high.

“Participants generally noted that a tight policy stance needs to be maintained until incoming data provides confidence that inflation is on a sustained downward path down to 2%, which is likely to take some time,” he said. the summary of the meeting as published CNBC International.

“Given unacceptable and persistent levels of inflation, some participants commented that historical experience warns against premature easing of monetary policy,” he added.

“A number of attendees stressed that it is important to communicate clearly that the slowing pace of rate hikes is not indicative of a weakening of the Committee’s determination to achieve its price stability objective or of a judgment that inflation is on the verge of a perpetual downward trend,” the minutes said. .

In December, the Fed raised the interest rate by 0.5%, to 4.25% -4.5%. This policy continued the most aggressive interest rate hike cycle in 40 years, at the highest level in 15 years.

Even so, the 50 basis point hike was smaller than the previous four rate hikes. That’s a 75 basis point increase.

This had made the market wonder. Will the Fed continue to raise interest rates in the future at a lower rate?

“Participants generally indicated that upside risks to the inflation outlook remain a key factor shaping the policy outlook,” the minutes said.

“Participants generally observed that maintaining a tight policy stance for an extended period until inflation is clearly on track towards 2% is appropriate from a risk management perspective,” he explained.

In fact, this treaty was seen in the announcement of the head of the Fed, Jerome Powell, after the announcement of interest rates. He indicated that some progress has been made in the battle against inflation, but that it won’t stop and expects interest rates to remain at higher levels even after the hikes stop.

[Gambas:Video CNBC]