Before the last meeting, there was speculation on the financial markets that the Fed could cut interest rates again in the second half of the year. According to the minutes, such expectations could counteract the effects of the interest rate hikes on the financial markets.
Some members also saw a risk that inflation could prove more stubborn than previously expected. Recently, however, inflation in the USA has been falling and some economists fear that the economy will be put under too much strain.
At the mid-December meeting, the Fed therefore slowed the pace of rate hikes. It raised key interest rates by 0.50 percentage points to a range of 4.25 to 4.50 percent. Previously, it had raised interest rates four times in a row by 0.75 percentage points. Fed Chairman Jerome Powell, however, promised further interest rate hikes.
Further tightening is also signaled in the minutes: “The participants continued to assume that a continuous increase in key interest rates would be appropriate in order to achieve the targets.” However, the announcement does not indicate at what pace the Fed could raise interest rates further.
The publication did not play a major role in the currency and bond markets. The US stock market fell slightly.
/jsl/he
WASHINGTON (dpa-AFX)
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