Saturday, August 23, 2025

Fed Minutes Suggest Policy Makers Can’t Decide Between Slowing Hikes or Keeping Rates High

The freshly-released minutes from this month’s FOMC meeting suggest most members believe its may soon be appropriate to reduce the pace of rate hikes, while some officials stressed a more restrictive terminal rate should remain in place until inflation shows stronger signs of abating.

Prior to the minutes’ release, markets were pricing in a 100% chance of a half-percentage point rate hike come December, with only a 12% probability of 75 basis-point increase. Indeed, the FOMC minutes from November 2 showed most participants think the Fed should downshift its hawkish policy to perhaps a smaller, 50 basis-point hike next month, in order to avert undue risks of financial instability on the US economy. “A substantial majority of participants judged that a slowing in the pace of increase would likely soon be appropriate,” the minutes read.

“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,” the minutes continued. However, other participants expressed more hawkish opinions, where “ongoing increases in the target range for the federal funds rate would be appropriate in order to attain a sufficiently restrictive stance of policy to bring inflation down over time.”

At the same, the participants acknowledged that uncertainty exists in terms of how high such a restrictive territory needs to reach before the 2% inflation target is achieved, but it’ll nonetheless be based on incoming economic data. Still, participants were surprised with how wrong they were about transitory inflation, particularly that “the ultimate level of the federal funds rate that would be necessary to achieve the committee’s goals was somewhat higher than they had previously expected.”

After the November meeting, Fed Chair Jerome Powell warned Americans that rates will still need to ultimately increase by more than policy makers expected during their September meeting, whilst suggesting the pace of forthcoming hikes may ease. Since the last FOMC gathering, inflation abated to an annualized 7.7%, while the unemployment rate ticked slightly higher to 3.7%— still low with respect to historic data.

Information for this briefing was found via the Federal Reserve and the BLS. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

Video Articles

Artemis Q2 Earnings: Strong Start For A New Operator

A Medical Breakthrough the Market Overlooked | David Elsley – Cardiol Therapeutics

Why Grade Beats Size in Silver Mining | Frank Basa – Nord Precious Metals

Recommended

Emerita Resources Expands El Cura Drill Program By 10,000 Metres As Deposit Remains Open For Expansion

ESGold Signs MOU For Tailings Project In Colombia With Grades Up To 42 g/t Gold, 280 g/t Silver

Related News

Bank of Canada Maintains Target Rate At 5.00% At April Meeting

The Bank of Canada has maintained its target for the overnight rate at 5%. Despite...

Wednesday, April 10, 2024, 09:55:25 AM

Eurozone Inflation Soars to 2% for First Time Since 2018

In yet another sign that mounting inflation is becoming pronounced around the globe, for the...

Wednesday, June 2, 2021, 03:34:00 PM

US Economy Headed for Colossal Recession

America’s economy is about to plummet at Mach speed into a recession, despite optimistic virtue...

Monday, June 13, 2022, 09:29:05 PM

Used Car Prices Signal Inflation Is Not Yet Defeated

News which suggests that inflation may remain higher for longer seems to come in daily....

Sunday, March 12, 2023, 01:39:00 PM

Inflation Rises to 0.5% in September But Price Pressures Remain Subdued

It appears that inflation has finally hit Canada, but price pressures still remain restrained as...

Wednesday, October 21, 2020, 02:45:00 PM