WASHINGTON — With inflation rates remaining high, officials from the Federal Reserve conveyed a sense of caution during their recent meeting regarding the possibility of rapidly decreasing interest rates, which adds to the ongoing uncertainty about their future decisions.
During the meeting held on November 6-7, it was indicated that even if inflation trends downward toward the Fed’s goal of 2%, it would be prudent to lower rates slowly. The minutes from this meeting reveal that officials prefer a gradual approach to easing monetary policy.
However, the minutes do not offer clear insights into the Fed’s actions expected during their next meeting slated for December 17-18. Wall Street analysts indicate that there’s almost an equal chance of a quarter-point rate cut occurring at this upcoming gathering. While many economists predict that the Fed might implement a reduction for the third time this year, they also acknowledge the potential for the Fed to pause further cuts in subsequent meetings.
Back in September, the Federal Reserve hinted at the possibility of cutting its key interest rate up to four times throughout the next year. Nevertheless, in light of recent developments, both investors and economists have adjusted their expectations to anticipate fewer reductions. Current economic growth appears robust, inflation is persistently hovering above the Fed’s target, and various proposals from President-elect Donald Trump, particularly regarding increased tariffs, may further intensify inflationary pressures.