Fed Officials Discussed Slowing Interest Rate Increases ‘Soon’
The central bankers discussed the need to slow rate increases soon at their last meeting, while signaling that they are likely to raise borrowing costs higher.Federal Reserve officials agreed at their November meeting that it would soon be appropriate to slow interest rate increases, minutes from the gathering showed, as they shifted their emphasis toward how high interest rates will eventually rise.Central bankers lifted interest rates by three-quarters of a percentage point for a fourth straight time at their Nov. 1-2 meeting, bringing the federal funds rate to nearly 4 percent. Rates were set just above zero as recently as March.The Fed has been carrying out the most aggressive campaign to restrain the economy in decades as it tries to wrestle the fastest inflation since the 1980s back under control. By making it more expensive to borrow money, the Fed’s rate moves can cool demand across the economy, allowing supply to come back into balance and price increases to moderate.But officials are debating just how much additional action is needed to ensure that inflation comes to heel. They want to make certain that they do enough: Failing to curb inflation quickly could make it a more permanent feature of the American economy, which would make it even more difficult to stamp out later on. But policymakers want to avoid doing more than is necessary to restrain price increases, because doing so could cost jobs and dent wages, leaving people worse off economically.Striking that balance will be a challenge for the Fed. The economy is behaving unusually after years of pandemic disruptions, and policymakers have few modern episodes of high inflation to use as guideposts. Many economists expect inflation to fade next year as rent increases slow and demand for goods moderates, but forecasters have been repeatedly surprised by inflation’s staying power over the past 18 months.Inflation F.A.Q.Card 1 of 5What is inflation? More