WASHINGTON: The minutes of the US Federal Reserve’s latest monetary policy review meeting showed a substantial majority of members judged that a slowing in the pace of increase in policy rates would likely “soon be appropriate”.
“A slower pace in these circumstances would better allow the Committee to assess progress toward its goals of maximum employment and price stability,” the minutes published on Wednesday local time.
The minutes show a few participants commented that slowing the pace of increase could reduce the risk of instability in the financial system.
“A few other participants noted that, before slowing the pace of policy rate increases, it could be advantageous to wait until the stance of policy was more clearly in the restrictive territory and there were more concrete signs that inflation pressures were receding significantly,” it said.
For the record, the US Federal Reserve on November 3 raised key interest rates in its fight against red hot inflation in the country. It raised the key policy rate by 75 basis points to over a decade high at 3.75-4.0 per cent.
Notably, this was the fourth consecutive hike of such magnitude.
Raising interest rates is a monetary policy instrument that typically helps suppress demand in the economy, thereby helping the inflation rate decline.
Inflation in the US remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures.
The US monetary policy committee had anticipated that ongoing increases in the rates will be appropriate in order to attain a policy stance that is “sufficiently restrictive” to return inflation to the 2 per cent target over time.
The US central bank’s aim has been to achieve maximum employment and inflation at the rate of 2 per cent over the long run. (ANI)