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Federal Reserve policymakers agreed last month that it would be appropriate to maintain a restrictive stance “for some time,” while acknowledging they were probably at the peak rate and would begin cutting in 2024.
“Participants viewed the policy rate as likely at or near its peak for this tightening cycle,” according to the minutes of the December 12-13 Federal Open Market Committee meeting released Wednesday. That said, officials “reaffirmed that it would be appropriate for policy to remain at a restrictive stance for some time until inflation was clearly moving down sustainably.”
The minutes indicated increased optimism among participants about the path of inflation, noting “clear progress.” The committee expressed a willingness to cut the benchmark lending rate in 2024 should that trend continue, though they gave no indication easing could begin as soon as March, as futures traders expect.
“In their submitted projections, almost all participants indicated that, reflecting the improvements in their inflation outlooks, their baseline projections implied that a lower target range for the federal funds rate would be appropriate by the end of 2024,” the minutes said.
At the meeting, bankers voted to hold the benchmark lending rate steady in a range of 5.25 per cent to 5.5 per cent for a third consecutive time. While the FOMC’s statement left the door open for another hike, officials’ forecasts signaled the end of the aggressive tightening cycle.
First Published: Jan 04 2024 | 11:59 PM IST
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