The latest meeting minutes from the U.S. Federal Reserve (Fed) indicate that the central bank
is likely to continue with its current pace of interest rate hikes.
Minutes from the Fed’s September meeting show that central bank officials have been surprised
at the pace of inflation and they expect higher interest rates to continue until consumer prices
come down significantly.
In discussions leading up to a 75-basis point rate hike last month, policymakers reiterated that
interest rates are likely to continue rising until the problem of inflation shows signs of resolving
itself.
Officials also said that with inflation “showing little sign so far of abating ... they had raised their
assessment of the path of the federal funds rate that would likely be needed to achieve the
Committee’s goals.”
The September Fed meeting took place ahead of a recent spate of data showing that inflation
pressures remain elevated in the U.S.
The central bank’s preferred inflation gauge rose 6.2% in August, well above the Fed’s 2%
target.
Members of the rate-setting Federal Open Market Committee noted at the September meeting
that the U.S. economy needs to slow to get inflation under control.
The Fed members lowered their projections for the American economy, expecting GDP to grow
at only a 0.2% annualized pace in 2022 and 1.2% in 2023.
The meeting concluded with the Fed members approving their third consecutive 75-basis point
increase, taking benchmark U.S. interest rates to a range of 3% to 3.25%.
Markets expect a similar-sized rate hike to be approved at the next Fed meeting in November.
