ZIn order to curb inflation, the US Federal Reserve wants to raise interest rates further while keeping an eye on the economic outlook. That’s according to the minutes of September’s interest rate meeting, released on Wednesday. The currency watchdogs agreed that they must raise the key interest rate to a level that is more restrictive – that is, the economy should be reined in more. After that, it is important to maintain this level for some time. Several panellists felt it was important to “adjust” the scope of further monetary tightening to mitigate the risk of a significant negative impact on the economic outlook.
There are fears among investors that the Fed could stall the economy by being too aggressive. The Federal Reserve has been ratcheting up interest rates in huge strides for months to keep inflation under control. The inflation rate in August was 8.3 percent, well above the central bank’s target of 2.0 percent. According to the experts polled by Reuters, the inflation number for September due on Thursday should end up at 8.1 percent.
In September, the Fed raised the key interest rate unusually sharply by three-quarters of a percentage point for the third time in a row. It is currently in a range of 3.00 to 3.25 percent. At their September meeting, the monetary watchdogs signaled that they could up the ante and raise it to an average level of 4.25 to 4.50 percent by the end of the year. According to their projections, the key interest rate should end up at 4.50 to 4.75 percent at the end of 2023.
Another jumbo rate hike is expected on the financial markets for the next meeting in early November. According to Fed Deputy Chair Lael Brainard, the central bank must “carefully” approach monetary policy and be guided by the data situation.
On the financial markets, the minutes of the meeting did not initially cause any major price fluctuations, as many positions were already known. The US dollar trended slightly weaker after the publication of the transcript. US Treasury yields also fell slightly. The reactions on the stock markets were limited.
