Fed Minutes Show Concerns of More Persistent High Inflation
Policy makers revised higher their expectations for rate increases, though some signaled caution about overdoing them amid risks of economic and financial volatility, according to minutes of the Sept. 20-21 gathering released Wednesday. The minutes suggest the Fed is likely to raise rates by 0.75 percentage point at their meeting on Nov. 1-2, said Ellen Zentner, chief U.S. economist at Morgan Stanley, in a report Wednesday.
“The minutes reaffirmed a clear commitment to remain on an aggressive path of policy tightening, and maintain that higher level for longer, even as over-tightening risks are coming into view,” she said. The Fed has lifted its benchmark federal-funds rate five times this year to a range between 3% and 3.25% from near zero, the most rapid pace of rate increases since the early 1980s to fight inflation running near 40-year highs.
Officials approved rate increases of 0.75-percentage point at each of their past three meetings. In a speech Monday, Fed Vice Chairwoman Lael Brainard cautioned against raising rates too rapidly to allow officials time to study how higher borrowing costs are coursing through the economy. While her remarks didn’t directly push back against rate increases that are already anticipated by investors, they represented the most comprehensive effort by a senior Fed official this year to build the case against an even steeper path for further rate rises.