Fed’s Minutes Reveal Extreme Caution about Cutting Rates Too Soon

Federal Reserve minutes on Wednesday showed extreme caution about cutting interest rates too quickly, a decisive signal to speculation that the cut will not happen soon.

Fed officials indicated at their last meeting that they were not in a rush to raise interest rates, and expressed their optimism and caution about inflation, according to the minutes of the session released on Wednesday.

The summary of the meeting indicated a general feeling of optimism that the US Federal Reserve’s policy moves succeeded in reducing the inflation rate, which reached its highest level in more than 40 years in mid-2022.

Despite this optimism, officials indicated they wanted to see more before starting to ease policy, while saying interest rate hikes were likely over.

“When discussing monetary policy expectations, participants viewed the interest rate as likely to have peaked during this tightening cycle,” the minutes said, reported CNBC, but they added that they do not believe it would be appropriate to lower the target range for the federal funds rate until they gain greater confidence that inflation is moving sustainably towards 2%.