The US Federal Reserve (Fed) remains committed to raising the federal funds rate to a “reasonably restrictive” level, keeping it at that level for some time to cope with inflation.
However, some participants in the September monetary policy meeting warned that the pace of monetary tightening could be adjusted to mitigate risks to the economy going forward, the minutes of the meeting said. Federal Open Market Committee (FOMC) held on 21 and 22 September.
“Some participants note that, given the current highly uncertain global economic and financial scenario, it would be important to adjust the pace of further monetary tightening to mitigate the risk of a significant adverse impact on the economic outlook.” pay attention to federal protocols.
Moreover, members of the central bank, led by Jerome Powell, believed that “as soon as the exchange rate [dos fundos federais] reaches a sufficiently restrictive level, it may be appropriate to maintain this level for some time until there is convincing evidence that inflation is on its way back to the 2% target.”
At the last monetary policy meeting in September, when it raised its benchmark interest rate by 75 basis points for the third time in a row, the FOMC had already signaled its intention to slow down the pace of interest rate hikes in 2024 alone.
On the so-called “dot chart” — the Fed’s projections — the central bank predicted that the federal funds rate would rise to 4.4% by the end of the year and reach 4.6% in 2023. According to these projections, the federal funds rate for federal taxes should only come down from 2024, when they fall to 3.9%. In 2025, it should decrease to 2.9%.
However, even at this point, the monetary authority, led by Jerome Powell, made it clear that it would be ready to “adjust monetary policy if risks arise that could interfere with the achievement of goals.”
Currently, the key interest rate is set in the range of 3% to 3.25%, which has not been the case since 2008.
