Fed Awaits Evidence Before Shift on Rates(ft. WSJ)

◈ Fed Awaits Evidence Before Shift on Rates

 

Federal Reserve officials were unwilling to conclude they were done raising interest rates when they decided earlier this month to extend a pause in rate increases.

 

But minutes of their most recent policy meeting suggested they might be comfortable holding rates steady for at least the rest of the year.

 

“All participants agreed that the committee was in a position to proceed carefully,” said the minutes of the Oct. 31-Nov. 1 meeting released on Tuesday. “Participants ex-pected that the data arriving in coming months would help clarify the extent to which” a slowdown in inflation was continuing amid higher borrowing costs, the minutes said.

 

Since officials last met, none have made a strong case to lift rates at their next meeting, Dec. 12-13, even though several have said it was too soon to change their view that another rate increase is more likely than a rate cut.

 

The minutes said officials then generally saw the risks of raising rates too much versus raising them too little as better balanced than earlier this year. They continued to see risks of higher-than-expected inflation and lower-than-expected growth, the minutes said.

 

Officials most recently raised their benchmark federal- funds rate in July to a range between 5.25% and 5.5%, a 22-year high. They began lifting rates from near zero in March 2022 to combat inflation that soared to its highest level in four decades.

 

A run-up in long-term Treasury yields from around 4% in early August accelerated after officials met in mid-September, with the yield on the 10year note briefly hitting 5% in October. The yield has since retreated to about 4.4% after signs that growth, hiring, and inflation are cooling.

 

Economic projections released at the September meeting showed most officials had penciled in one more rate increase this year.

 

-TUESDAY, NOVEMBER 22, 2023