Fed "Inflation Still Threatening... Continued Interest Rate Hikes"

[Asia Economy New York=Special Correspondent Joselgina] The U.S. central bank, the Federal Reserve (Fed), reaffirmed its tightening stance, stating that inflation remains at a threatening level and that it will continue its path of raising the benchmark interest rate.

[Image source=Reuters Yonhap News]

According to the minutes of the February Federal Open Market Committee (FOMC) regular meeting released by the Fed on the 22nd (local time), participants judged that "there are signs that inflation is declining recently, but it is not yet sufficient."

They agreed that the labor market remains very tight, exerting continuous upward pressure on wages and prices. They also noted, "To be confident that inflation is consistently declining, evidence of more progress across a broader range of areas will be necessary."

The minutes also included that there is high uncertainty regarding economic activity, the labor market, and inflation outlook. Overseas factors such as China's easing of zero-COVID policy and Russia's invasion of Ukraine were also judged to pose risks of rising inflation.

Earlier, at the FOMC held from January 31 to February 1, the Fed raised the benchmark interest rate by 0.25 percentage points to 4.5?4.75%. However, to confirm the cumulative effects of tightening, the rate hike was reduced from 0.5 percentage points to 0.25 percentage points, adjusting the pace of further increases.

The minutes confirmed that the 0.25 percentage point increase at the February FOMC was not a unanimous decision, and that some minority members advocated for a 0.5 percentage point increase. However, the exact number and identities of these minority opinions were not detailed. Previously, James Bullard, president of the Federal Reserve Bank of St. Louis and a representative hawk within the Fed, had stated last week that he advocated for a 0.5 percentage point increase following inflation data that exceeded expectations.

This content was produced with the assistance of AI translation services.