From CNBC:

Federal Reserve officials indicated that they’re in no hurry to cut interest rates, expressing optimism and caution on inflation. While policy makers decided to leave their key overnight borrowing rate unchanged, they won’t make any cuts until they have more confidence that inflation is receding. This is in response to inflation hitting its highest level in over 40 years. Officials are worrying about the decision of lowering rates too quickly. Furthermore, they reiterated that there won’t be an alteration of rate hikes, believing the policy rate was at its peak for this tightening cycle. The last strategy has paid off bearing out as separate readings on consumer and producer prices showed inflation running hotter than expected. Furthermore, the stable economy has encouraged members that the succession of 11 interest rate hikes implemented in 2022 and 2023 have not substantially hampered growth.

Discussions are on about the Fed’s bond holdings on the Fed’s balance sheet, and a more in-depth discussion will take place at the March meeting. Policymakers are likely to take a go-slow approach. “Slowing the pace of runoff” could help smooth the transition to that level of reserves or could allow the Committee to continue balance sheet runoff for longer,” the minutes said. ‘In addition, a few participants noted that the process of balance sheet runoff could continue for some time even after the Committee begins to reduce the target range for the federal funds rate.’ Amid this, the Fed considers current policy restrictive, so the big question going forward will be how much it will need to be relaxed both to support growth and control inflation.

The consumer price index rose 3.1% on a 12-month basis in January, with the consumer price index rising 3.9%, and the Sticky CPI rising 4.6%. Producer prices increased 0.3% on a monthly basis.

Chair Jerome Powell has signaled that the Fed is not looking to reduce interest rates. After a string of reports showed inflation still elevated, the markets have recalibrated their expectations for rate cuts. Fed funds futures market are now pushing for a June rate cut and a reduced number of rate hikes from three to four.



Read more: Fed minutes January 2024: