Federal Reserve officials earlier this month stressed the need to raise interest rates Faster and perhaps more than markets expect to tackle the growing problem of inflation, according to the minutes of the meeting released on Wednesday.
Not only did policy makers see the need for a 50-point hike in benchmark interest rates, but they also said that similar increases are likely to be necessary in the next several meetings.
They further noted that policy may have to move beyond a “neutral” position in which it is neither supportive nor restrictive of growth, an important consideration for central bankers that might reverberate through the economy.
The meeting revealed that the US economy is very strong, and inflation is very high.
“Most participants considered that a 50 basis point increase in the target range would likely be appropriate in the next two meetings,” the minutes said. In addition, FOMC members noted that “a tightening of monetary policy may become appropriate depending on the evolving economic outlook and risks”.
The May 3-4 session saw the Federal Open Market Committee (FOMC) agree to raise the interest rate by half a percentage point and put in place a plan, starting in June, to reduce the central bank’s $9 trillion balance sheet which consists mostly of Treasury bills and securities. Mortgage backed.
This was the largest interest rate increase in 22 years and came as the Federal Reserve is trying to bring down inflation from a 40-year high.
Market rates currently see the Fed moving to rates between 2.5% and 2.75% by the end of the year, which would be consistent with what many central bankers see as a neutral rate. However, the data in the minutes indicate that the commission is ready to go further.
The meeting summary stated that “all participants affirmed their strong commitment and determination to take the necessary measures to restore price stability.”