The Fed maintains its confidence in declining inflation

Although the monetary policy response for now “would involve maintaining” the central bank’s reference interest rate at its current level, the minutes, published on Wednesday, also reflected the debate on possible further increases.

“Several participants mentioned their willingness to tighten monetary policy further if risks to inflation materialize in a way that would make the measure appropriate,” using a pronoun that does not fit into the usual ones, such as some, many and most, used in the minutes to give an idea of ​​how many officials expressed a particular opinion.

The minutes also reflected debate over how tight current monetary policy is given the strength of the economy, an important debate given the need for it to be “sufficiently” restrictive to cool inflation.

Since then, Federal Reserve officials have tempered expectations of imminent interest rate cuts, which investors expect as soon as September.

But while Federal Reserve officials acknowledged the risk of inflationary pressures rising again in the economy, they largely viewed the data from earlier in the year as a temporary setback in the battle to return inflation to its 2% target. by the central bank.

The meeting was the sixth in a row without changes in interest rates. At this point, policymakers appear likely to keep the Fed’s benchmark rate in the range of 5.25% and 5.0% at least through September, after their confidence in easing price pressures eases. was shaken by higher-than-expected inflation during the first three months of this year.