The US Federal Reserve has left the door open for further rate hikes.
“Most participants continued to see significant upside risks to inflation, which could mean further tightening monetary policy may necessitate,” reads the Minutes of the July 26 interest rate decision, released Wednesday.
However, the protocol did not give a clear indication of how to proceed. Future steps would depend on the “wholeness” of incoming information. Although the economy and the labor market have remained robust recently, some members still see dangers for economic activity and the unemployment rate.
At its most recent meeting, the US Federal Reserve raised the key interest rate range by 0.25 percentage points to a range of 5.25 to 5.50 percent. In the previous session, it paused for the first time in the current cycle of increases. In March 2022, the key interest rate was still just above the zero line. Since then, the Fed has raised interest rates sharply. After the last meeting, Fed Chair Jerome Powell did not rule out further rate hikes. No decisions have been made on future rate hikes – but will consider further tightening of monetary policy if necessary.
After all, the inflation rate is still above the target value of two percent. It was 3.2 percent in July, while the core inflation rate was 4.7 percent. This calculates food and energy prices that are susceptible to fluctuations.
The statements from the protocol were not surprising. The reaction in the financial markets was therefore limited. The euro continued to trade just below the USD 1.09 mark. US government bond prices remained under some pressure. The US stock markets fell a little for a short time. However, they quickly recovered.
/jsl/he
WASHINGTON (dpa-AFX)