© Archyde.com. The headquarters of the US Federal Reserve in Washington, in a photo from archive Archyde.com.
WASHINGTON, Oct 12 (Archyde.com) – Federal Reserve policymakers agreed they needed to tighten policy, and then maintain that pace for some time, in order to achieve the U.S. central bank’s goal of lowering inflation, according to minutes from Wednesday’s meeting. Council, which lasted two days last month.
The minutes of the September 20-21 meeting showed that several Federal Reserve officials “emphasized that the cost of mitigating measures to reduce inflation is likely to outweigh the cost of aggressive measures.”
At the meeting, several officials offered their assessments of the path of interest rate increases that they said would likely be necessary to achieve the MPC’s objectives.
However, many participants in the discussions said it would be important to “balance” the pace of tightening policy and efforts to mitigate the risks of the significant negative effects of such tightening on the economic outlook.
At last month’s meeting, Federal Reserve officials raised interest rates by three-quarters of a percentage point for the third time in a row in an attempt to bring inflation from its highest levels in 40 years, and Chairman Jerome Powell then pledged to “stick to that path until we make sure the job is done.” .
US central bank policymakers agreed in their comments that they believe there is an urgent need to curb inflation, even if their increasingly hawkish policy means higher unemployment.
The past weeks marked a turning point for financial markets, which clung for most of this year in the hope that the Federal Reserve would reverse course next year and cut interest rates in the face of slowing growth and high unemployment. Federal Reserve officials have publicly rejected this forecast, saying they expect to keep interest rates high for some time, even following they are finished.
The markets tried to absorb the hard-line policy of the Council, but the direct effects appeared in the catastrophic losses of the US stock markets, the rapid rise in government debt returns and the rise of the dollar, which exacerbated the bad conditions in foreign markets.
Policy makers’ expectations, released at last month’s meeting, show that the target rate is currently in the range of three percent and 3.25 percent, the highest level since 2008, to rise to the range of 4.25 percent and 4.50% by the end of the year and then end year 2023 with a range of 4.50 percent and 4.75 percent. Forecasts for the end of 2022 indicate that a further increase of 75 basis points is likely to be applied at the remaining two central bank meetings this year.
Recent inflation data showed little improvement despite the Federal Reserve’s harsh tightening of policy, despite its announcement of a 75 basis point interest rate hike in June and July, and the labor market remains strong with wages rising sharply as well.
(Prepared by Ahmed El-Sayed for the Arab Bulletin – Editing by Hassan Ammar)
