From CNBC: 2024-05-22 14:39:34

Federal Reserve officials expressed concerns about inflation during their most recent meeting, leading to a lack of confidence in moving forward with interest rate reductions. Meeting minutes revealed concerns about easing and the persistence of high inflation levels. Participants also discussed potential risks to inflation and the impact on consumers, particularly those with lower incomes.

The Federal Open Market Committee unanimously decided to hold the benchmark short-term borrowing rate at 5.25%-5.5%, the highest in 23 years. The decision was supported by continued solid economic growth data. Despite minor improvements, consumer surveys indicated growing worries about inflation, especially among low- and moderate-income households.

Central bankers voiced caution regarding potential rate cuts in public remarks following the meeting. Fed officials, including Chair Jerome Powell, previously indicated the need for “several months” of good data before considering a rate cut. Market expectations have adjusted, with a 60% chance of a cut in September and uncertainty about further cuts by December, compared to earlier predictions of multiple cuts.

Overall, the Fed remains uncertain about the future path of inflation and its impact on the economy. Although optimistic about growth prospects, officials acknowledge the challenges posed by high inflation rates. Concerns about consumer finances and risky financial behaviors due to inflation pressures were noted, highlighting a complex landscape for future monetary policy decisions.

Read more: Fed minutes May 2024: Concern over stubborn inflation