Federal Reserve officials remain committed to further raising interest rates to dampen rising prices, but agreed that “at some point” it would be appropriate to slow the pace of such hikes, the Federal Reserve said on Wednesday.
In the minutes of July’s monetary policy meeting, which led to a second massive 0.75 percentage point hike, Fed officials said it would take time for “unacceptably high” inflation to get back close to the 2% target be brought back.
However, they warned there is a “risk” that the Fed could go too far in trying to dampen demand through lower prices.
The central bank has raised the benchmark interest rate four times this year, including two massive three-quarter-point hikes in June and July, after annual US inflation rose to 9.1 percent in June.
Consumer prices fell to 8.5 percent in July and soaring gas prices, exacerbated by the war in Ukraine, have fallen in recent weeks.
Members of the Fed’s policy-making Federal Open Market Committee (FOMC) noted the recent fall in energy prices and some signs that supply constraints have eased.
However, they said that falling oil prices are “unreliable” to lower headline inflation.
Instead, slowing demand will be a key factor in containing price pressures, the minutes said.
The central bank’s quick, aggressive moves have started to have an impact, and the minutes said while officials expected the US economy to expand further in the second half of the year, “many expected growth in economic activity to be flat Pace below trend.”
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