Some Fed Officials Express Concern about Raising Interest Rates
New York, NY, August 17, 2023-"Most Federal Reserve officials backed an increase in interest rates last month but some saw rising risks that they might raise rates too high, underscoring growing caution about further increases,” reports the Wall Street
“Minutes of the July policy meeting, released Wednesday, said some officials thought the risks of raising rates too much versus too little ‘had become more two-sided, and it was important that the committee’s decisions balance the risk of an inadvertent overtightening of policy against the cost of an insufficient tightening.’
“At the same time, officials still saw significant risks that inflation might not fall as much as they expect, which could require them to raise rates again this year, the minutes said. Those risks include stronger economic growth and the reversal of recent supply-chain improvements or declines in commodity prices, which have been largely responsible for the slowdown in inflation.
“Officials lifted their benchmark federal-funds rate last month by a quarter-percentage-point to a range between 5.25% and 5.5%, a 22-year high. The decision followed a brief pause in rate increases in June and marked their 11th hike since March 2022, when they raised it from near zero.
“In June, most officials thought they would raise rates to a range between 5.5% and 5.75% this year, implying one more quarter-point increase later this year. But inflation has slowed notably in the two months since they made those projections. Their next meeting is Sept. 19-20.
“‘I believe we may be at the point where we can be patient and hold rates steady,’ Philadelphia Fed President Patrick Harker, a voting member of the central bank’s rate-setting committee, said last week.”