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Fed Minutes Hint At Slower Pace Of Interest Rate Hikes

eccles building 110818 23nov22 lt

The Federal Reserve released the minutes of its early November monetary policy meeting on Wednesday, providing further evidence the central bank is considering slowing the pace of its interest rate hikes.

The minutes said a "substantial majority" of meeting participants judged that a slowing in the pace of rate hikes would likely "soon be appropriate."

A slower pace of rate hikes would better allow the Fed to assess progress toward its goals of maximum employment and price stability, the minutes said.

The Fed added, "The uncertain lags and magnitudes associated with the effects of monetary policy actions on economic activity and inflation were among the reasons cited regarding why such an assessment was important."

However, a few other participates suggested it could be advantageous to wait until the rates were more clearly in restrictive territory and there were more concrete signs that inflation pressures were receding significantly before slowing the pace of rate hikes.

The minutes also said participants agreed further interest rate increases would be appropriate in order to attain a sufficiently restrictive stance to bring inflation down over time.

Various participants also indicated the ultimate level of the federal funds rate that would be necessary to achieve the Fed's goals was somewhat higher than they had previously expected.

The Fed said many participants commented that there was significant uncertainty about the ultimate level needed to achieve their goals and that their assessment of that level would depend, in part, on incoming data.

"The minutes of the Fed's early-November policy meeting suggest that although most officials were in favor of slowing the pace of rate hikes at upcoming meetings, there was no consensus on how high the peak in rates would ultimately need to be, or how long to leave policy in that restrictive stance," said Paul Ashworth, Chief North America Economist at Capital Economics.

The central bank's next monetary policy meeting is scheduled for December 13-14, with CME Group's FedWatch Tool currently indicating a 75.8 percent chance of a 50 basis point rate hike and a 24.2 percent chance of another 75 basis point rate hike.

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