FOMC Minutes: Rates Need to Stay High

The Federal Open Market Committee members have agreed that monetary policy must remain restrictive until inflation is moving towards the 2% goal, according to minutes from their most recent meeting.

The minutes also show that the committee members still worry that inflation could be stubborn or move higher, and that more may need to be done. They believe that policy will need to stay “restrictive” until data shows inflation on a convincing trek back to the central bank’s 2% goal over time.

The minutes said that members believe they can move “proceed carefully” and make decisions based on the totality of incoming information and its implications for the economic outlook and the balance of risks.

The release comes amid overwhelming sentiment on Wall Street that the Fed is done hiking, with traders in the fed funds futures market indicating virtually no probability that policymakers will increase rates again this cycle.

The market expects that the Fed will enact the equivalent of four quarter percentage point cuts before the end of 2024. The Fed’s benchmark funds rate is currently targeted in a range between 5.25%-5.5%, the highest level in 22 years.