Sept FOMC showed agreement on higher rates for longer
NEW YORK (Reuters) – Federal Reserve policymakers agreed they needed to move to a more restrictive policy stance – and then maintain that for some time – in order to meet the U.S. central bank’s goal of lowering inflation, a readout of last month’s two-day meeting showed on Wednesday.
The minutes of the Sept. 20-21 meeting showed many Fed officials “emphasized the cost of taking too little action to bring down inflation likely outweighed the cost of taking too much action.”
Many officials said they had raised their assessments of the path of interest rate increases that would likely be needed to achieve the committee’s goals.
STORY:
MARKET REACTION:
STOCKS: S&P 500 extended a slight gain and was up 0.15%, to 3,594.34 BONDS: U.S. Treasury 10-year yield eased price was last up 11/32 to yield 3.8962%, down from 3.939% late on Thursday.FOREX: The dollar index turned 0.141% lower
COMMENTS:
CHRIS ZACCARELLI, CHIEF INVESTMENT OFFICER, INDEPENDENT ADVISOR ALLIANCE, CHARLOTTE, NC
“For the most part there’s nothing to earth shattering in the Fed minutes. The fact they’re saying that there is more of a risk doing too little than doing to much maybe reinforces the idea that they’re more likely to continue to raise rates at a quick pace.”
“There were some members talking about calibrating their response. That could mean the Fed is aware that if they raise rates too quickly that could cause a lot of economic damage. They’ve been talking about how they’re willing to risk a recession in order to bring inflation back under control but its possible that as the recession risks increase they may lose their nerve a little bit.”
“The market is looking ahead to the CPI release tomorrow. There’s still some bulls out there hoping that if there’s a slowing of inflation it will give the Fed some reason to slow down the rate increases or potentially pause them.”
“The bulls are hopeful inflation will start cooling more quickly than expected and the Fed won’t go as high as some people fear. The bears believe the fed is going to continue to go higher, raise rates to a pretty high level and keep them there for an extended period of time and cause a recession, potentially a bad one.”
(Compiled by the Global Finance & Markets Breaking News team)
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