Against the background of the recent upheavals in the markets, a short time ago the minutes of the last meeting of the “Open Markets Committee” of the Federal Reserve were published. The minutes show that the heads of the Fed are determined to continue the war against the high inflation in the US and noted that although there is a noticeable slowdown in the rate of inflation, more interest rate hikes are still necessary in the coming months.
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“The inflation rate is still much higher than 2% while the labor market remains very tight and puts pressure on wages and prices,” the report said.
The heads of the Fed decided at the end of the discussions on February 1 to raise interest rates by 0.25% to a level of 4.5%-4.75%. However, participants still noted that despite the relatively low interest rate hike, there are still dangers from inflation. “The participants noted that although there is a noticeable decrease in the rate of inflation in recent months, we still need to wait for more data in order to be more certain that this is a continuous and consistent decrease.”
It was also said during the meeting that “continuous” interest rate increases are still necessary to fight inflation.
In the weeks that have passed since the meeting, data on inflation and the labor market were published that indicated that the Fed still has quite a bit of work to do to fight inflation in the US. Markets now estimate that the Fed will raise interest rates at least 3 more times, at a rate of 0.25% each time.
Following the recently published data, the yields in the bond market of the American government soared. The yield on the 10-year bond rose to approximately 3.92% from 3.40% at the beginning of the month.
It was also said at the meeting that some of the participants estimate that the Fed will be able to bring about a “soft landing” in the American economy and others think that the risk of sliding into recession has recently increased. “The participants noted that the level of uncertainty regarding the rate of growth, inflation and the unemployment rate remains high,” the statement said.