US inflation remains unacceptably high after nearly two years of monetary tightening, minutes from the Federal Reserve’s latest policy meeting said on Tuesday.
“The participants [in the meeting] stressed that current inflation remained unacceptably high while acknowledging that it had moderated somewhat over the past year,” the Fed said, referring to its Federal Open Market Committee (FOMC).
The US central bank also suggested it could resume monetary tightening after holding rates unchanged in three straight meetings of the FOMC in July, September and November.
While Wall Street is clamoring for interest rate cuts to begin in 2024, the Fed did not address the matter.
However, the Fed emphasized that economic data showing a significant retreat in inflationary pressure would be all important for it to change course on interest rates.
“All participants judged that it would be appropriate for policy to remain at a restrictive stance for some time until inflation is clearly moving down sustainably toward the Committee’s objective,” the minutes from the FOMC meeting said. “Participants stressed the need to see more data indicating inflation pressures were abating to be more confident of price increases returning to 2%.”
Inflation measured by the so-called Consumer Price Index (CPI) hit a four-decade high of 9.1% during the year to June 2022. By October this year though, the CPI had moderated to just 3.2%.
Yet, that number remains well beyond the central bank’s 2% per year inflation target.
“Participants continued to view a period of below-trend growth in real GDP and some softening in labor market conditions as likely to be needed to bring aggregate demand and aggregate supply into better balance and reduce inflation pressures sufficiently to return inflation to 2% over time,” the minutes added.
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