Fed Minutes Show Officials See More Work Ahead to Bring Inflation Down
Inflation remains above the Federal Reserve’s 2% goal, keeping the prospect of higher borrowing costs in play.
Inflation remains above the Federal Reserve’s 2% goal, keeping the prospect of higher borrowing costs in play. Minutes from the September policy meeting show all 19 officials backed a quarter-point rate increase, while most judged another hike would probably be warranted before the year ends.
The minutes, made public Wednesday, said officials saw a resilient economy and a labour market near full employment as reasons the central bank could keep focusing on price stability. The 12 voting members of the Federal Open Market Committee approved the increase without dissent; seven regional bank presidents who serve on a rotating basis also supported it.
Inflation risks remain tilted upward
Participants generally considered inflation elevated, with almost all judging that risks to prices were weighted to the upside. Some said those risks had grown more pronounced. The minutes also described job-market risks as broadly balanced.
Officials pointed to the possibility that heavy investment in artificial intelligence could lift overall demand beyond what the economy can supply, adding pressure to prices. The Fed staff’s economic outlook was stronger than it had been in July, reinforcing the view among most participants that the economy could absorb further tightening.
That did not amount to a commitment to raise rates again. Policymakers said they would approach each meeting with an open mind, and future decisions would depend on incoming data.
Recent signals suggest a debate over timing
Since the September decision, Fed Vice Chair Philip Jefferson and New York Fed President John Williams have indicated they see little urgency to increase borrowing costs. Weak job gains reported Friday strengthened that case, according to available reports.
The September minutes contrast with the discussion at the Fed’s July meeting, when officials said further tightening could be needed if inflation failed to ease. At that meeting, the committee voted 9-3 to hold its benchmark rate steady.
The latest minutes leave the next move unsettled: most participants saw another increase as likely to be appropriate by year-end, but said the path would turn on fresh economic information.
