Policymakers were uncertain about when it would be appropriate to ease, according to minutes of the Federal Open Market Committee's policy meeting from April 30-May 1 that were made public on Wednesday.
During their most recent meeting, members of the Federal Reserve expressed growing concern about inflation and said they lacked the confidence to proceed with interest rate reductions.
The meeting came after a series of readings that indicated that inflation was starting in 2024 and was more obstinate than officials had anticipated. All the indicators pointed to price increases well ahead of the 2 per cent inflation rate that the Federal Reserve is targeting.
According to the brief overview, participants noted that although inflation had decreased over the previous year, there had been a lack of further progress toward the Committee's 2 per cent objective in recent months. The components of both good and service price inflation showed significant increases in the most recent monthly data.
As per the minutes of the FOMC meeting released on Wednesday, a few participants indicated that they could have supported a slightly higher redemption cap on Treasury securities than was decided upon or a continuation of the current pace of balance sheet runoff at this time.
Interest Rate
The FOMC made the decision to maintain the nearly two-decade-high short-term borrowing rate in the 5.25 per cent to 5.5 per cent range. The choice was made in light of data showing steady economic growth going forward.
There have been few gains since then; the consumer price index for April indicates an annual inflation rate of 3.4 per cent, which is marginally less than that of March. At 3.6%, the core CPI reached its lowest level since April 2021.
The FOMC made the decision to maintain the 23-year high short-term borrowing rate in the 5.25 per cent - 5.5 per cent range. The choice was made in light of data showing steady economic growth going forward.
There have been few gains since then; the consumer price index for April indicates an annual inflation rate of 3.4 per cent, which is marginally less than that of March.
Alarmed Sounded Over BNPL & Credit Card
Concerns were also expressed regarding consumers using buy-now-pay-later services and other riskier financing methods, such as using credit cards more frequently.
Officials are optimistic about growth prospects, but this year they anticipate some moderation. They think inflation will eventually reach the 2 per cent target again, but they don't know when it will happen or how high interest rates will affect it.
