Economic news

Fed Members Support Push to Restrictive Stance on Rates to Tame Inflation

2022.08.17 22:29

Fed Members Support Push to Restrictive Stance on Rates to Tame Inflation

By Yasin Ebrahim

Investing.com — Federal Reserve members were unified in their view that pushing interest rates to a restrictive level was needed to bring down inflation toward the central bank’s target, the minutes of Fed’s 26-27 July meeting showed Wednesday.

At the conclusion of its previous meeting on July. 27, the Federal Open Market Committee raised its benchmark rate by 0.75% to a range of 2.25% to 2.5%.

“Participants noted that … moving to an appropriately restrictive stance of policy was essential for avoiding an unanchoring of inflation expectations,” the minutes showed.

In the press conference that followed the monetary policy statement, Fed Chairman Powell signaled that the central bank may consider a pause on rate hikes after the September meeting to assess the impact of tightening on the economy and inflation.

At the July meeting there appeared to be support among members to reassess the pace of tightening at some point, the minutes showed, though some were in favor of maintaining the Fed’s benchmark rate at a “sufficiently restrictive level” for some time to ensure that inflation was firmly on a path back to 2%.

Since the July fed meeting, economic data including signs of easing inflation and a surge in monthly jobs have bolstered bets on less hawkish rate hikes.

Fed members, however, were quick to push back against the prospect of easing the pace of monetary policy tightening, and reiterated that the fight against inflation is far from over. Earlier this month, San Francisco Federal Reserve Bank President Mary Daly stated that “inflation remains far too high and not near our price stability goal.”

The slower pace of inflation seen last month was mainly driven by falling energy prices, but core inflation, which excludes food and energy, will prove key to determining whether inflation will remain higher for longer.

“All eyes will be focused on how sticky is core inflation…that’s going to start driving the next leg of this inflation discussion,” Robert Conzo, CEO of The Wealth Alliance told Investing.com in an interview on Tuesday.

The Fed has hiked rates by 225 basis points, or 2.25% in just five months, prompting worries that the central bank could overdo do it on monetary policy tightening, pushing the economy into a recession.

While the Fed has repeatedly pointed to a strong jobs market as an indicator of economic strength, the central bank is “starting to get concerned about recessionary fears,” Conzo said, adding that the prospect of a 50 basis point rate hike for September is “priced in.”

Further clues on monetary policy are just a week away as investors await commentary from Powell at the Jackson Hole Economic Symposium on Aug. 25-27.

Source

Related Articles

Leave a Reply

Back to top button
bitcoin
Bitcoin (BTC) $ 98,280.33 3.74%
ethereum
Ethereum (ETH) $ 3,482.23 1.67%
tether
Tether (USDT) $ 0.999441 0.04%
xrp
XRP (XRP) $ 2.28 0.51%
bnb
BNB (BNB) $ 707.34 2.89%
solana
Solana (SOL) $ 196.42 1.76%
dogecoin
Dogecoin (DOGE) $ 0.330918 1.90%
usd-coin
USDC (USDC) $ 0.999946 0.09%
staked-ether
Lido Staked Ether (STETH) $ 3,478.89 1.85%
cardano
Cardano (ADA) $ 0.913427 0.36%
tron
TRON (TRX) $ 0.256724 1.17%
avalanche-2
Avalanche (AVAX) $ 40.85 3.08%
chainlink
Chainlink (LINK) $ 24.57 0.98%
the-open-network
Toncoin (TON) $ 5.98 4.87%
wrapped-steth
Wrapped stETH (WSTETH) $ 4,127.59 1.93%
shiba-inu
Shiba Inu (SHIB) $ 0.000023 2.15%
sui
Sui (SUI) $ 4.50 1.74%
wrapped-bitcoin
Wrapped Bitcoin (WBTC) $ 97,983.25 3.70%
hedera-hashgraph
Hedera (HBAR) $ 0.311835 0.11%
stellar
Stellar (XLM) $ 0.384039 1.81%
polkadot
Polkadot (DOT) $ 7.45 0.86%
weth
WETH (WETH) $ 3,477.29 1.49%
hyperliquid
Hyperliquid (HYPE) $ 27.70 2.29%
bitcoin-cash
Bitcoin Cash (BCH) $ 465.48 0.31%
leo-token
LEO Token (LEO) $ 9.55 1.22%
uniswap
Uniswap (UNI) $ 13.95 0.67%
litecoin
Litecoin (LTC) $ 109.02 1.03%
bitget-token
Bitget Token (BGB) $ 5.68 16.32%
pepe
Pepe (PEPE) $ 0.000019 0.95%
wrapped-eeth
Wrapped eETH (WEETH) $ 3,670.92 1.46%
near
NEAR Protocol (NEAR) $ 5.52 0.12%
ethena-usde
Ethena USDe (USDE) $ 0.998968 0.05%
aave
Aave (AAVE) $ 372.56 0.97%
internet-computer
Internet Computer (ICP) $ 11.39 4.45%
usds
USDS (USDS) $ 0.99924 0.18%
aptos
Aptos (APT) $ 9.62 0.71%
polygon-ecosystem-token
POL (ex-MATIC) (POL) $ 0.518233 1.47%
crypto-com-chain
Cronos (CRO) $ 0.158846 2.50%
vechain
VeChain (VET) $ 0.05235 3.59%
mantle
Mantle (MNT) $ 1.25 2.79%
ethereum-classic
Ethereum Classic (ETC) $ 27.61 0.52%
render-token
Render (RENDER) $ 7.59 2.04%
bittensor
Bittensor (TAO) $ 514.29 3.20%
mantra-dao
MANTRA (OM) $ 3.79 0.87%
monero
Monero (XMR) $ 195.63 3.69%
whitebit
WhiteBIT Coin (WBT) $ 24.89 1.64%
fetch-ai
Artificial Superintelligence Alliance (FET) $ 1.36 0.16%
dai
Dai (DAI) $ 0.99993 0.10%
arbitrum
Arbitrum (ARB) $ 0.803308 0.99%
filecoin
Filecoin (FIL) $ 5.37 1.64%