Federal Reserve policymakers agreed last month that it would be appropriate to take a restrictive stance “for some time,” while acknowledging that they were likely at interest rate peaks and would begin cutting spending in 2024 .
“Participants considered policy rates likely to be at or near their peak for this tightening cycle,” according to minutes of the Dec. 12-13 Federal Open Market Committee meeting released Wednesday. That said, officials “reaffirmed that it would be appropriate for policy to maintain a restrictive stance for some time until inflation was clearly on a sustained downward trajectory.”
The minutes indicated increased optimism among participants about the path of inflation, with “clear progress” noted. The committee expressed willingness to cut lending rates in 2024 if this trend continues, although they gave no indication that easing could start as early as March, as futures traders expect.
“In their submitted projections, nearly all participants indicated that, reflecting improvements in their inflation outlook, their baseline projections implied that a lower target range for the Federal Funds Rate by the end of 2024 would be appropriate,” the minutes said.
During the meeting, the bankers voted to keep interest rates stable for the third time in a row within a range of 5.25 to 5.5 percent. While the FOMC statement left the door open for another hike, officials' predictions signaled the end of the aggressive tightening cycle.
First print: January 4, 2024 | 11:59 PM IST