The minutes of the Federal Reserve meeting on monetary policy showed that a strong majority of bank officials agreed to slow the pace of raising key interest rates to a quarter of a percentage point.
The majority of officials agreed that higher inflation risks remain a “major factor” in shaping monetary policy.
Participants emphasized the continuation of raising interest rates until inflation is controlled.
The minutes stated that inflation “remained well above” the Fed’s target of 2%, in conjunction with labor markets that “remained very tight, which contributed to the continuation of upward pressure on wages and prices.”
“Almost all participants agreed that it was appropriate to raise the target range for the federal funds rate by 25 basis points,” said the minutes of the January 31-February 1 meeting, which were published on Wednesday. Many respondents said this would allow the Federal Reserve to better “range” future increases.
However, “respondents noted in general that the rising risks to inflation expectations remain a key factor in shaping monetary policy expectations,” and that it would take interest rates to be raised and kept high “for inflation to reach the 2% target.”
Only a “few” of participants in the meeting supported a larger half-percentage-point increase in interest rates, or said they “could support it”.
The minutes showed that the Federal Reserve is heading towards a possible end point to increase current interest rates, as well as tending to slow the pace in order to approach more cautiously a possible stopping point while leaving the field open to the extent of eventually raising rates in the event that inflation does not slow down.
The minutes indicated that “the participants agreed that the (Federal Open Market) Committee has made significant progress over the past year in moving towards a sufficiently restrictive mode of monetary policy.”