Nov. 23 (UPI) — The Federal Reserve is more in favor of smaller interest rate hikes than previously indicated, according to the minutes of a meeting held on Nov. 1 and 2.
During November’s Federal Open Market Committee meeting, Fed officials considered easing back on incoming rate hikes, moving from a 0.75 percentage point increase to a 0.5 point increase. This comes after four consecutive 0.75 point increases.
“A number of participants observed that, as monetary policy approached a stance that was sufficiently restrictive to achieve the committee’s goals, it would become appropriate to slow the pace of increase in the target range for the federal funds rate,” a summary of the meeting reads. “A few participants commented that slowing the pace of increase could reduce the risk of instability in the financial system.”
The FOMC meeting took place before two key, encouraging reports on inflation were released. The first, the Consumer Price Index, indicated prices in October increased at the slowest rate since January. The second, Bureau of Economic Analysis’ personal income and outlays report, suggests wages are increasing while inflation is beginning to slow.
At the time of the meeting, the most recent reports showed discouraging figures relating to inflation.
“Participants agreed that inflation was unacceptably high and was well above the committee’s longer-run goal of 2%. Some participants noted that the burden of high inflation was falling disproportionally on low-income households,” according to the minutes.
After seeing the recent reports, Federal Reserve governor Christopher Waller voiced encouragement about the economy and how it was responding to the Federal Reserve’s actions. He said the reports indicate that the economy is “cooling down” and a smaller half-point increase may be appropriate, though he warned he did not want to overreact.
San Francisco Federal Reserve president Mary Daly was more hesitant about easing off the gas.
The FOMC will consider the next interest rate hike during its meeting on Dec. 13 and 14.
