The latest meeting minutes released by the U.S. Federal Reserve show that central bank officials remain concerned about persistent inflation.
Minutes from the April 30 to May 1 meeting of the Federal Open Market Committee show that members in attendance lack confidence about the ability to move forward with interest rate reductions at the present time.
The meeting was held after economic data showed that inflation is more stubborn and entrenched than officials had expected at the start of this year.
The minutes from the meeting state that: “Participants observed that while inflation had eased over the past year, in recent months there had been a lack of further progress toward the Committee’s two per cent objective.”
The minutes also state that “various participants mentioned a willingness to tighten policy further should risks to inflation materialize in a way that such an action became appropriate.”
At the meeting’s conclusion, the committee voted unanimously to hold the benchmark short-term interest rate at its current range of 5.25% to 5.50%, a 23-year high.
The U.S. Federal Reserve targets annualized inflation at 2%. However, the latest reading for April was a 3.4% annual inflation rate.
The stock market continues to adjust its expectations for interest rate cuts this year. Futures traders are now pricing in a 60% chance of the first rate reduction occurring in September.
Markers are pricing in a total of two interest rate cuts in the U.S. this year, with the second reduction occurring in December.
At the start of the year, markets had been pricing in at least six quarter percentage point interest rate cuts in America throughout 2024.
