WASHINGTON (Reuters) – U.S. Federal Reserve (Fed) officials agreed at their latest meeting that they could take a cautious approach on interest rates, saying further hikes would only be necessary “if” data suggested insufficient progress against inflation.
According to the minutes published Tuesday of the October 31-November 1 monetary policy meeting, “all participants agreed that the (Fed Monetary Policy) Committee was in a position to proceed with caution.”
“Participants noted that further tightening of monetary policy would be appropriate if information indicated that progress toward the (Fed’s) 2 percent inflation goal was insufficient,” it said.
These “minutes” show that the officials of the American central bank had to deal with contradictory economic signals during their meeting, at the end of which they once again decided to keep interest rates unchanged.
The US economy had just recorded annual growth of 4.9% in the third quarter, a pace considered inflationary, while financial markets raised borrowing costs for American households, businesses and the government, leaving fear an impact on economic growth and employment greater than what is considered necessary to bring inflation closer to the 2% objective.
Inflation has “remained well above” this objective, it is noted in the minutes, which should force the Fed’s policy to “remain on a restrictive stance for some time”, until the inflation is falling “sustainably”.
By setting conditions for a possible further rate hike and focusing more on how long current rates might need to be maintained, the minutes show, the Fed has marked a significant shift in the monetary tightening cycle. started in March 2022 to stem galloping inflation.
Officials of the American central bank seem to agree on an approach ruling out additional increases but without going so far as to state this, while inflation, at 3.4% according to the indicator favored by the Fed, remains well greater than its objective.
(Reporting Howard Schneider; French version Jean Terzian, edited by Tangi Salaün)
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