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Fed Minutes: Almost All Officials Backed a Lower 25 bps Hike

24 February 2023 03:57

The latest minutes of the Fed's fomc meeting have been released and showed that nearly all federal reserve policymakers agreed to slow the pace of rate increases to a quarter point reducing concerns in the markets of higher fed rates  for a longer period of time.

The minutes for The Fed's fomc meeting that ended on February first also stated that fed policymakers  believed that further slowing the pace of rate increases will give them better perspective and help the fed reach their target of two percent inflation.

This runs contrary to recent hawkish comments by some fed governors which had increased concerns in the markets that Fed rates could be increased more aggressively.

The minutes showed that only a few policymakers supported a larger 50 basis point rate hike.

Nevertheless the latest 25 bps rate hike increased The Fed's benchmark rate to a range of 4,5 to 4,75 percent  the highest level in 15 years.

The central bank’s rate hikes typically lead to more expensive mortgages auto loans credit card borrowing and business lending.

With the economy now looking stronger and inflation more persistent economists expect the fed to raise its key rate this year by a higher amount than previously projected. Many now envision the central bank boosting its benchmark short-term rate to a range of 5.25 percent  to 5.5 percent.

Last week a government report showed that consumer price inflation rose faster than expected from December to January and annual inflation barely slowed last month to 6.4 percent.