Fed sees more rate hikes ahead, but at a slower pace, meeting minutes show
Federal Reserve officials indicated during their June meeting that further tightening is likely, though slower than the rapid rate increases that have characterized monetary policy since early 2022. Policymakers decided against a rate rise amid concerns about economic growth, even though most members think further hikes are coming. Citing the lagged policy impact and other concerns, they skipped the June meeting after enacting 10 straight rate increases. Officials felt that “leaving the target range unchanged at this meeting would allow them more time to assess the economy’s progress toward the Committee’s goals of maximum employment and price stability.“
The Federal Open Market Committee members expressed their hesitation due to several factors. They said that a brief pause would give the committee time to assess the impacts of the hikes. These hikes have totaled 5 percentage points, the most aggressive moves since the early 1980s. “The economy was facing headwinds from tighter credit conditions, including higher interest rates, for households and businesses, which would likely weigh on economic activity, hiring, and inflation, although the extent of these effect remained uncertain,” the minutes said. The unanimous decision not to raise rates came in “consideration of the significant cumulative tightening in the stance of monetary policy and the lags with which policy affects economic activity and inflation.” Markets responded slowly to the release. The Dow Jones Industrial Average was off about 120 points nearing the final hour of trading, while Treasury yields were sharply higher.