US Federal Reserve minutes reveal possibility of slowing interest rate hikes ‘soon’

The minutes of the meeting of the Federal Reserve (the central bank of the United States), held in early November, showed that a “large majority” of monetary policy makers agreed that “it will probably be appropriate soon” to slow the pace of interest rate hikes , as the debate on the effects of the Bank’s rapid tightening of monetary policy widens.

The Fed minutes indicate they are leaning towards a 50 basis point rate hike in December.

“The vast majority of attendees felt that a slowdown in the pace of growth would likely be timely soon,” according to the minutes of their Nov. 1-2 meeting released Wednesday in Washington.

Also as President Jerome Powell said during his press conference post- meeting that rates are likely to eventually rise more than officials expected in September, Wednesday’s report provided a more nuanced view: “many officials” – a description not commonly used – concluded that rates will eventually catch up peak at a higher level than expected in previously, according to Bloomberg.

In another revelation, Fed staff told officials at the meeting that their assessment of recession risk had risen to about 50-50. This was the first such warning since the central bank began raising interest rates in March.

At the meeting, officials raised the key interest rate by 75 basis points for the fourth consecutive time, expanding the most aggressive tightening campaign since the 1980s to fight inflation that has hit a 40-year high.

Investors expect the Fed to hike interest rates by 50 basis points when it meets Dec. 13-14 and see rates peak at 5% by mid-2023. Powell has an opportunity to influence those expectations in a speech in Washington scheduled for November 30.

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