By Anadolu Agency
April 10, 2024 5:16 pmISTANBUL
The US Federal Reserve wants to see more “confidence” that inflation is moving lower to its 2% target before beginning to cut interest rates, according to minutes of its recent meeting released Wednesday.
Federal Open Market Committee (FOMC) participants generally noted their uncertainty about the persistence of high inflation and expressed that recent macroeconomic data have not increased their confidence that inflation was moving sustainably down to 2%, said the minutes from the Fed’s last meeting that concluded March 20.
“Participants noted indicators pointing to strong economic momentum and disappointing readings on inflation in recent months and commented that they did not expect it would be appropriate to reduce the target range for the federal funds rate until they had gained greater confidence that inflation was moving sustainably toward 2 percent,” it added.
The Fed skipped an interest rate hike in March as widely expected, and kept its federal funds rate unchanged between the 5.25% – 5.5% target range.
Annual consumer inflation in the US, however, rose 3.5% in March, and it was up monthly 0.4%, both coming in above expectations, according to figures released by the Bureau of Labor Statistics on Wednesday.
“(FOMC) Members agreed that they did not expect that it would be appropriate to reduce the target range until they have gained greater confidence that inflation is moving sustainably toward 2 percent,” said the minutes.
The Fed’s next two-day meeting will conclude May 1 and it is widely expected to keep the federal funds rate unchanged.
The probability of a rate cut of 25 basis points at the Fed’s June 12 meeting stood at just 16.5% as of Wednesday, according to the FedWatch Tool provided by the US-based Chicago Mercantile Exchange Group.
The probability of a cut of 25 basis points at the July meeting was 35.7% and 45.5% for the September meeting.
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