A 'substantial majority' of policymakers at the Federal Reserve's meeting early this month agreed it would 'likely soon be appropriate' to slow the pace of interest rate hikes as debate broadened over the implications of the U.S. central bank's rapid tightening of monetary policy, according to the minutes from the session.
Federal Reserve Chair Jerome Powell speaks during a news conference in Washington, U.S., November 2, 2022. REUTERS/Elizabeth Frantz/File PhotoWASHINGTON, Nov 23 - A "substantial majority" of policymakers at the Federal Reserve's meeting early this month agreed it would "likely soon be appropriate" to slow the pace of interest rate hikes as debate broadened over the implications of the U.S.
More important than the size of coming rate increases, the minutes noted, was an emerging focus on just how high rates will need to rise to lower inflation - and the need to calibrate that carefully in coming months. Fed staff economists raised their inflation projections for "coming quarters" and noted also that a recession in the next year was "almost as likely" as the baseline outlook for sluggish economic growth.prices and sent Treasury yields lower.added to its gains earlier in the day and was last up about 0.6%, near its highest level in two months. The yield on the 2-year Treasury note , the maturity most sensitive to Fed rate expectations, dropped to 4.49%.
"Merely the fact that they're going to be slowing the pace confirms what the majority of people have been hoping to see," said Michael James, managing director of equity trading at Wedbush Securities.The minutes also showed an emerging debate within the Fed over the risks that rapid policy tightening could pose to economic growth and, even as policymakers acknowledged there had been little demonstrable progress on inflation and that rates still needed to rise.
"The path forward for monetary policy is a battle between the 'various' and the 'several,'" said Brian Jacobsen, senior investment strategist with Allspring Global Investments in Menomonee Falls, Wisconsin. "It was only 'various' officials that thought they should revise higher their terminal rate projections while several thought plowing ahead raised the risks of financial instability.
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