Fed Minutes Suggest Officials Still Not Ready To Begin Cutting Interest Rates
03 Julho 2024 - 11:29AM
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The Federal Reserve released the minutes of its latest monetary
policy meeting on Wednesday, revealing officials are still not
prepared to begin cutting interest rates.
The minutes of the June 11-12 meeting said participants noted
that progress in reducing inflation toward the Fed's 2 percent
target had been slower this year than they had expected last
December.
"They emphasized that they did not expect that it would be
appropriate to lower the target range for the federal funds rate
until additional information had emerged to give them greater
confidence that inflation was moving sustainably toward the
Committee's 2 percent objective," the Fed said.
Participants also emphasized the importance of conditioning
future policy decisions on incoming data, the evolving economic
outlook, and the balance of risks.
During the meeting, the Fed once again decided to maintain the
target range for the federal funds rate at 5.25 to 5.50 percent, as
was widely expected.
Fed officials also provided their latest economic projections at
the meeting, with the forecasts suggesting just one interest rate
cut this year compared to the three predicted in March.
However, the accompanying dot plot suggested there is some
division among Fed officials about the outlook for rates this
year.
The division was also reflected in the minutes of the meeting,
which said most participants view the current policy stance as
restrictive but some noted there was uncertainty about the degree
of restrictiveness of current policy.
"Some remarked that the continued strength of the economy, as
well as other factors, could mean that the longer-run equilibrium
interest rate was higher than previously assessed, in which case
both the stance of monetary policy and overall financial conditions
may be less restrictive than they might appear," the Fed said.
The central bank added, "A couple of participants noted that the
longer-run equilibrium interest rate was a better guide for
determining where the federal funds rate may need to move over the
longer run than for assessing the restrictiveness of current
policy."
Some participants emphasized the need for patience in allowing
the restrictive policy stance to restrain aggregate demand and
further moderate inflation pressures, the minutes said.
Several participants also observed that rates might need to be
raised if inflation were to persist at an elevated level or to
increase further, the Fed said, while a number of participants
remarked that monetary policy should stand ready to respond to
unexpected economic weakness.
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