(MENAFN) According to the recently released Federal Open Market Committee's (FOMC) meeting minutes, officials at the US Federal Reserve want to see further evidence of falling inflation before they consider easing monetary policy.
The FOMC's meeting minutes, released on Wednesday, revealed that participants acknowledged that there had been a welcome reduction in the pace of price increases over the last three months. However, they also stressed that more evidence of progress across a broader range of prices is needed to be confident that inflation is on a sustained downward path.
The minutes noted that annual US consumer inflation stood at 6.4% in January, down from 6.5% in December, and considerably lower than the 9.1% yearly gain recorded in June, which was the largest since November 1981. Last year, the Fed increased interest rates by 425 points in seven rate hikes to counter record inflation that had surged to a 40-year high.
The Fed's latest interest rate increase, implemented on Feb. 1, amounted to 25 basis points, a decrease from the 50 basis points hike in December that followed four consecutive rate hikes of 75 basis points. However, Fed officials could still vote for more rate hikes this year, as the minutes revealed that FOMC participants "continued to anticipate that ongoing increases in the target range for the federal funds rate would be appropriate."
Fed officials are treading cautiously when it comes to inflation, and the FOMC's meeting minutes suggest that they require more convincing evidence of falling inflation before easing monetary policy. It is essential to note that inflation can undermine economic growth by eroding purchasing power and consumer confidence, and central banks worldwide aim to maintain stable inflation rates.
Therefore, Fed officials are likely to continue monitoring inflation trends closely and remain vigilant in their efforts to control inflation, even as the US economy recovers from the pandemic.
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