FOMC Minutes Show Fed Will Maintain Higher Rates Until Inflation Falls to 2%

The FOMC minutes from last month’s meeting reiterated what markets were already bracing for: the Fed will maintain its course on hawkish monetary policy, even if it comes at the cost of the labour market and slower GDP growth.

Minutes from the Fed’s policy meeting on September 20 released on Wednesday show members are anticipating higher interest rates will remain in place for the foreseeable future, or until at least the Fed’s target of 2% inflation is reached. “Participants judged that the Committee needed to move to, and then maintain, a more restrictive policy stance in order to meet the Committee’s legislative mandate to promote maximum employment and price stability,” read the minutes. “The cost of taking too little action to bring down inflation likely outweighed the cost of taking too much action.”

Members acknowledged price pressures are “showing little sign so far of abating,” putting undue hardship on lower-income Americans. Indeed, the September meeting came ahead of an onslaught of economic data showing elevated inflation remains persistent throughout the economy, with the PCE index rising 6.2% year-over-year in August— significantly above the Fed’s preferred 2% target. “Participants commented that recent inflation data generally had come in above expectations and that, correspondingly, inflation was declining more slowly than they had previously been anticipating,” the minutes said.

Source: BEA

Rather than recognize that the Fed’s unprecedented money printing spree created the highest inflation in over 40 years in the first place, the FOMC laid all the blame on supply chain disruptions and labour shortages. They noted the economy will need to significantly cool before price pressures abate, and have downgraded output growth to a 0.2% annualized pace in 2022, followed by a paltry expansion of 1.2% next year.

Officials failed to indicate the size of the potentially forthcoming rate hike in November, but some members alluded that restrictive rates could remain in place “as long as necessary.”

Information for this briefing was found via the Federal Reserve and the Bureau of Economic Analysis. 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

Why $50 Silver, $4000 Gold Might Be Closer Than Anyone Thinks | Bradley Langille – GoGold Resources

Why Silver’s True Price Could Be Much Higher | Joaquín Marias – Argenta Silver

Gold Enters A ‘Stronger For Longer’ Phase | Richard Young – i-80 Gold

Recommended

Emerita Resources Intersects Further Mineralization At El Cura, Expanding Deposit

ESGold Sees ANT Survey Reveal Vertically Continuous System To 1,200 Metres Depth

Related News

European Central Bank Significantly Raises Inflation Forecast, Signals More Aggressive Rate Hikes

The European Central Bank has found itself in a very tough spot: with entrenched price...

Sunday, June 12, 2022, 11:12:00 AM

Declining US Grain Supplies Send Commodity Prices Skyrocketing

It appears that a second commodity boom may be on the horizon, as US crop...

Thursday, January 14, 2021, 10:53:00 AM

US Private Payrolls Disappoint Despite ADP’s Revised Methodology

In further testament that the labour market is rapidly losing momentum despite assurances from the...

Wednesday, August 31, 2022, 01:02:29 PM

US Congressman Leads Charge In Preventing The Fed To Develop CBDC

US Congressman Tom Emmer has introduced a significant new bill aimed at preventing the Federal...

Thursday, September 14, 2023, 03:01:00 PM

ECB Unexpectedly Delivers 50 Basis-Point Rate Hike as Inflation Runs Amok

The European Central Bank yesterday delivered an unexpected rate hike of 50 basis points, marking...

Friday, July 22, 2022, 03:32:00 PM