Minutes from the December meeting of the Federal Reserve Board and the Federal Open Market Committee were released this week, and they show Fed members still focused on fighting inflation, not lowering interest rates. (The full minutes can be found here.)
“Participants generally observed that a restrictive policy stance would need to be maintained until the incoming data provided confidence that inflation was on a sustained downward path to 2%, which was likely to take some time,” according to the summary of the meeting. “In view of the persistent and unacceptably high level of inflation, several participants commented that historical experience cautioned against prematurely loosening monetary policy.”
While the December rate hike of 50 basis points was smaller than the four previous three-quarter point hikes, the Fed warned not to take this as a sign of shifting priorities.
“A number of participants emphasized that it would be important to clearly communicate that a slowing in the pace of rate increases was not an indication of any weakening of the Committee’s resolve to achieve its price-stability goal or a judgment that inflation was already on a persistent downward path,” the minutes said. Nor is it “a judgment that inflation was already on a persistent downward path,” they added.
The current Fed benchmark lending rate is 4.25-4.50%, the highest in 15 years. Several Fed members from around the country have indicated they expect that rate to rise to around 5.5 percent or higher in 2023.
“We have a long way to go to get to price stability,” said Fed Chair Jerome Powell.