Fed Minutes Disclose Divide on Imminent Rate Cuts
(MENAFN) The recently released minutes from the US Federal Reserve’s latest meeting disclosed that the majority of officials leaned toward reducing the policy interest rate this year, though some remained opposed due to ongoing inflation concerns.
The document highlighted that most members maintained a cautious stance on potential adjustments to the borrowing rate. The Federal Open Market Committee unanimously opted to keep the benchmark rate steady within the 4.25% to 4.5% band, a level held since December.
"Most participants assessed that some reduction in the target range for the federal funds rate this year would likely be appropriate, noting that upward pressure on inflation from tariffs may be temporary or modest, that medium- and longer-term inflation expectations had remained well anchored, or that some weakening of economic activity and labor market conditions could occur," it said.
A minority of officials indicated they were open to lowering the rate as soon as the next meeting, contingent on incoming data meeting their expectations.
“Some” members believed that the most probable approach for monetary policy would be to keep rates steady throughout 2025, emphasizing that inflation readings continue to exceed the 2% goal, and inflation risks remain elevated due to factors like entrenched short-term inflation expectations and a resilient economy.
“Several” attendees noted that the current target range may be only slightly above the neutral policy rate.
The minutes reflect a shared view that monetary policy is now well-positioned to adapt as new economic data emerges.
“Participants agreed that although uncertainty about inflation and the economic outlook had decreased, it remained appropriate to take a careful approach in adjusting monetary policy,” the document stated.
Some officials expressed optimism that forthcoming trade agreements could ease inflationary pressures “if firms are able to quickly adjust their supply chains, or if firms can use other margins of adjustment to reduce their exposure to the effects of tariffs.”
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