US Fed officials feel interest rate cut appropriate at some point in 2024: Minutes
Apr 11, 2024
Washington [US], April 11 : US Federal Reserve officials felt that the key interest rate was likely at its peak and it would be appropriate to loosen the monetary policy stance at some point this year, the minutes of its latest policy review meeting showed.
"...almost all participants judged that it would be appropriate to move policy to a less restrictive stance at some point this year if the economy evolved broadly as they expected," the minutes, released overnight in Indian Standard Time showed.
Further, US central bank officials expect it would not be appropriate to reduce the key interest rate until they gain "greater confidence" that inflation is moving sustainably toward a comfortable 2 per cent, minutes of its latest monetary policy meeting showed.
The central bank participants also discussed the uncertainties around the economic outlook.
The minutes showed that the US central bank officials affirmed their strong commitment to returning inflation to the committee's 2 per cent objective.
"The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent," the minutes document read.
Further, risks around the inflation forecast were seen as tilted slightly to the upside, on possible supply-side disruptions and unexpectedly persistent inflation dynamics.
Consumer price inflation in the US continued to trend down, though it remained above 2 per cent.
On Wednesday, the latest data showed inflation in the US increased more than expected in March, putting cold water to hopes of an interest rate cut soon.
In the 12 months through March, the inflation increased 3.5 per cent year-on-year, the highest in about 6 months. This followed a 3.2 per cent rise in February.
The US Federal Reserve, in its March meeting, voted to leave the key interest rate unchanged at 5.25-5.50 per cent, keeping the policy rate unchanged for the fifth straight time on the trot.
During the Covid-19 pandemic, the interest rates were kept near zero. Raising interest rates is a monetary policy instrument that typically helps suppress demand in the economy, thereby helping the inflation rate decline.
The US central bank then indicated three interest rate cuts this year and affirmed that solid economic growth would continue.
The US Federal Reserve's commitment has been to bring down consumer inflation to its target of 2 per cent.
