WASHINGTON (dpa-AFX) – The US Federal Reserve has confirmed that a majority of the FOMC monetary policy committee expects a further interest rate hike this year. However, this message from the minutes of the mid-September interest rate meeting published on Wednesday should be viewed with caution. Recent statements by senior central bankers tend to indicate stable interest rates. The background is the capital market interest rates in the USA, which have risen significantly in recent weeks.
In recent days, several Fed central bankers – including Vice Chairman Philip Jefferson – have argued that the significant rise in interest rates in the bond market is making the fight against inflation easier. Since the Fed meeting on September 20th, US Treasury yields have risen sharply. Higher capital market interest rates are usually reflected in rising credit costs and deposit interest rates. Both dampen consumption and investment – and thus slow down economic dynamics and inflation.
As the minutes further show, the monetary policy debate at the Fed had already shifted in September. Since the key interest rates are near the peak, the debate should revolve less around the question of the level of interest rates, the transcript says. The more crucial question is how long the interest rate should be kept at an elevated level. It was agreed that the monetary policy It is said that it will have to remain tight for “some time” until one can be confident that inflation will decline sustainably.
At its September meeting, the Fed did not raise its key interest rates any further and left the further course largely open. However, the central bankers’ interest rate forecasts showed that a further increase is considered possible this year and that the interest rate next year is likely to be higher than previously expected. In the financial markets, this was associated with the expectation that the Fed would be able to keep its key interest rates high for a relatively long time in order to control inflation.
The Fed has raised its key interest rates eleven times in the past year and a half by a total of 5.25 percentage points. US monetary policy has rarely been tightened so strongly and quickly in recent decades. The background is the high inflation, which rose to a good nine percent last year. It is now significantly lower at 3.7 percent, but recently it has increased slightly again. New price data will be published on Thursday./bgf/he