A Look at What Newly Released Fed Minutes Reveal - Curt Long NAFCU Chief Economist and VP-Research

Curt will be presenting the state of the economy at our conference in Clearwater Beach from 10/3-6/23

WASHINGTON–Newly released minutes from the Federal Reserve’s most recent meeting shows nearly all of the policymakers supported the decision to continue to slow the pace of interest rate hikes, but also indicated that curbing inflation will remain the “key factor” in how much longer (and how much higher) the rate increases will continue.

The minutes seem to suggest a compromise between those on the Federal Open Market Committee (FOMC) who are worried about a slowing economy and those who are convinced inflation will prove to be persistent, and that the shift to smaller-sized hikes are merited by the inflation data.

Curt Long

"According to the minutes from the FOMC’s January meeting, several members favored a 50-basis point hike,” said NAFCU Chief Economist and VP-Research Curt Long. “Those members pointed to easing financial conditions after inflation peaked. Given the strength of the labor market and the decent economic returns so far in 2023, there are likely to be several more rate hikes in store." 

Also Worth Highlighting

Long said other points worth highlighting in the minutes include:

• Some participants judged that recent economic data signaled a somewhat higher chance of continued subdued economic growth, with inflation falling over time to the Committee’s longer-run goal of 2%.

• Participants agreed that the labor market remained very tight and assessed that labor demand substantially exceeded the supply of available workers.
• Participants noted that inflation data received over the past three months showed a welcome reduction in the monthly pace of price increases but stressed that substantially more evidence of progress across a broader range of prices would be required to be confident that inflation was on a sustained downward path, Long stated.

The Conundrum

The central bank's policy rate is currently in the 4.50%-4.75% range. The FOMC is scheduled to next meet March 21-22 meeting. As CUToday.info has reported, surprisingly strong employment data as well as ongoing strong retail sales have put the Fed in a conundrum about how high to push rates and when to back off.

02/22/2023 CUToday