Fed Officials Expect Interest Rates To Remain Restrictive For 'Some Time'

(RTTNews) - Federal Reserve officials expect to keep interest rates at a restrictive level for "some time," according to the minutes of the central bank's latest monetary policy meeting.

The minutes of the October 31-November 1 meeting, released Tuesday afternoon, said participants agreed policy should remain restrictive until inflation is clearly moving down sustainably toward the Fed's 2 percent objective.

Following the recent series of interest rate hikes, participants also agreed to proceed carefully and take a data-dependent approach to future policy decisions.

"Participants noted that further tightening of monetary policy would be appropriate if incoming information indicated that progress toward the Committee's inflation objective was insufficient," the Fed said.

The Fed also said participants expect data arriving in coming months to help clarify the extent to which the disinflation process was continuing.

The minutes revealed participants generally judged risks to the achievement of the Fed's goals had become more two sided, although most continued to see upside risks to inflation.

"These risks included the possibility that the imbalance of aggregate demand and supply could persist longer than expected and slow the progress on inflation, geopolitical tensions and risks emanating from global oil markets, the effects of a tight housing market on shelter inflation, and the potential for more limited declines in goods prices," the Fed said.

While economic activity has been resilient and the labor market has remained strong, many participants commented that there are still downside risks to economic activity.

The Fed said the risks include potentially larger-than-expected effects of the tightening in financial and credit conditions on aggregate demand and on bank, business, and household balance sheets; continued weakness in the commercial real estate sector; and potential disruptions to global oil markets.

The central bank's next monetary policy meeting is scheduled for December 12-13, with CME Group's FedWatch Tool currently indicating a 99.8 percent chance the Fed will leave interest rates unchanged.

The FedWatch Tool suggests the Fed is likely to keep rates on hold over the coming months before cutting rates in mid-2024.