US Federal Reserve minutes released Wednesday show most policy-makers foresee another interest rate hike by year’s end, as the central bank targets stubbornly high inflation.
At a meeting in September, the bank’s Federal Open Market Committee voted unanimously to raise interest rates by 25 basis points to a range between 3.75 and 4.00 percent. Personal Consumption Expenditures price index inflation the Fed’s preferred gauge for price increases hit a peak of 7.2 percent in June 2022 before beginning to fall. That stability is due to demographic changes and lower immigration.
Participants expressed concern that the longer energy prices remained at elevated levels as they currently are “the greater the risk that cost increases in certain sectors could lead to broader price pressures.” US households and businesses have been battered by years of high prices since the pandemic, with the Fed unable to achieve its long-term two-percent inflation target for more than half a decade. The Fed has a dual mandate of keeping inflation to its target while ensuring maximum employment.
The unemployment rate in the United States has been relatively steady over the last year, even as job growth has see-sawed.
“Almost all participants assessed that, while inflation risks were tilted to the upside, risks to the labor market had diminished and were now broadly balanced,” the Fed’s meeting minutes said.
