Fed considers it favorable to slow down the increase in US rates “soon”

The majority of the Federal Reserve Monetary Committee (Fed) of the United States deems pertinent an “early” deceleration in the increases of the interest ratesaccording to minutes of the early November meeting released Wednesday.

“A slower pace of rate hikes should allow the Committee to better assess progress” in the fight against inflation, while preserving the labor market, they say.

A substantial majority of the participants considered that an early slowdown in the rate of increase would be appropriate,” according to the minutes of the meeting held on November 1 and 2.

The Fed (central bank) embarked on an aggressive path to cool demand and lower prices in the world’s largest economy as inflation rose to the highest level in decades, raising the benchmark interest rate six times this year. , situating them between 3.75% and 4%.

Los interest rates of federal funds condition credit and these increases notably weakened the real estate market by making mortgage loans more expensive.

risks

For the next meeting of the US authority’s Monetary Committee (FOMC), scheduled for December 13-14, markets were already largely convinced -before the minutes were released- that the Fed would only raise rates in 50 basis points, according to the CME firm.

In fact, inflation began to slow down a bit, standing at 7.7% annually in October, according to the CPI index, against 8.2% in September.

But FOMC members “continue to expect interest rate hikes to continue until a zone narrow enough to control inflation is reached,” according to the minutes.

On the other hand, they do not give any indication as to what the “terminal level” of overnight rates would be, which “remains highly uncertain.”

But some of its members believe it will be “higher than previously thought” as “inflation shows little sign of abating.” The meeting was held a week before the publication of the last CPI.

A debate also appears to be brewing with “some participants” concerned about excessive rate hikes.

“There is a risk that the cumulative tightening of monetary policy will exceed what is necessary to reduce inflation” to the 2% target, fear some members, who also estimated that softening the pace of the increases could reduce the risks of instability in the Finance system.

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