Thrifty Banker
  • Politics
  • Business
  • World
  • Investing
  • Politics
  • Business
  • World
  • Investing

Thrifty Banker

Business

Federal Reserve minutes indicate worries over lack of progress on inflation

by May 23, 2024
May 23, 2024
Federal Reserve minutes indicate worries over lack of progress on inflation

Federal Reserve officials grew more concerned at their most recent meeting about inflation, with members indicating that they lacked the confidence to move forward on interest rate reductions.

Minutes from the April 30-May 1 policy meeting of the Federal Open Market Committee released Wednesday indicated apprehension from policymakers about when it would be time to ease.

The meeting followed a slew of readings that showed inflation was more stubborn than officials had expected to start 2024. The Fed targets a 2% inflation rate, and all of the indicators showed price increases running well ahead of that mark.

“Participants observed that while inflation had eased over the past year, in recent months there had been a lack of further progress toward the Committee’s 2 percent objective,” the summary said. “The recent monthly data had showed significant increases in components of both goods and services price inflation.”

The minutes also showed “various participants mentioned a willingness to tighten policy further should risks to inflation materialize in a way that such an action became appropriate.” Several Fed officials, including Chair Jerome Powell and Governor Christopher Waller, have said they doubt the next move would be a hike.

The FOMC voted unanimously at the meeting to hold its benchmark short-term borrowing rate in a range of 5.25%-5.5%, a 23-year high where it has been since July 2023.

“Participants assessed that maintaining the current target range for the federal funds rate at this meeting was supported by intermeeting data indicating continued solid economic growth,” the minutes said.

Since then, there have been some incremental signs of progress on inflation, as the consumer price index for April showed inflation running at a 3.4% annual rate, slightly below the March level. Excluding food and energy, the core CPI came in at 3.6%, the lowest since April 2021.

However, consumer surveys indicate increasing worries. For instance, the University of Michigan consumer sentiment survey showed the one-year outlook at 3.5%, the highest since November, while overall optimism slumped. A New York Fed survey showed similar results.

Stocks held in negative territory while Treasury yields were mostly higher following the minutes release.

Fed officials at the meeting noted several upside risks to inflation, particularly from geopolitical events, and noted the pressure that inflation was having on consumers, particularly those on the lower end of the wage scale. Some participants said the early year increase in inflation could have come from seasonal distortions, though others argued that the “broad-based” nature of the moves means they shouldn’t be “overly discounted.”

Committee members also expressed worry that consumers were resorting to riskier forms of financing to make ends meet as inflation pressures persist.

“Many participants noted signs that the finances of low- and moderate-income households were increasingly coming under pressure, which these participants saw as a downside risk to the outlook for consumption,” the minutes said. “They pointed to increased usage of credit cards and buy-now-pay-later services, as well as increased delinquency rates for some types of consumer loans.”

Officials were largely optimistic about growth prospects though they expected some moderation this year. They also said they anticipate inflation ultimately to return to the 2% objective but grew uncertain over how long that would take, and how much impact high rates are having on the process.

Immigration was mentioned on multiple occasions as a factor both helping spur the labor market and to sustain consumption levels.

Public remarks from central bankers since the meeting have taken on a cautionary tone.

Fed Governor Waller on Tuesday said that while he does not expect the FOMC will have to raise rates, he warned that he will need to see “several months” of good data before voting to cut.

Last week, Chair Jerome Powell expressed sentiments that weren’t quite as hawkish in tone, though he maintained that the Fed will “need to be patient and let restrictive policy do its work” as inflation holds higher.

Markets have continued to adjust their expectations for cuts this year. Futures pricing as of Wednesday afternoon after the release of the minutes indicated about a 60% chance of the first reduction still coming in September, though the outlook for a second move in December receded to only a bit better than a 50-50 coin flip chance.

Earlier this year, markets had been pricing in at lease six quarter-percentage point cuts.

This post appeared first on NBC NEWS
0
FacebookTwitterGoogle +Pinterest
previous post
Warner Bros. Discovery and ESPN strike 5-year deal for College Football Playoff games
next post
Amazon plans to give Alexa an AI overhaul — and a monthly subscription price

Related Posts

Wall Street CEOs say proposed banking rules would...

December 7, 2023

Walmart is laying off and relocating hundreds of...

May 16, 2024

UnitedHealthcare taps company veteran Tim Noel as new...

January 25, 2025

Retirees ‘stunned’ as market turmoil over tariffs shrinks...

April 7, 2025

Boeing CEO, other executives stepping down amid safety...

March 26, 2024

Wall Street CEOs say proposed banking rules will...

December 7, 2023

GM union workers ratify UAW deal following contentious...

November 18, 2023

The ‘funflation’ effect: Why Americans are spending on...

June 27, 2024

The U.S. added 199,000 jobs in November and...

December 9, 2023

Retail sales slumped 0.9% in January, down much...

February 15, 2025

    Sign up for our newsletter to receive the latest insights, updates, and exclusive content straight to your inbox! Whether it's industry news, expert advice, or inspiring stories, we bring you valuable information that you won't find anywhere else. Stay connected with us!


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Popular

    • 1

      Top 10 Countries for Natural Gas Production (Updated 2024)

      April 6, 2024
    • 2

      Trump-era China sanctions ended by Biden may be revived under new House GOP bill

      June 27, 2024
    • 3

      Top 10 Uranium-producing Countries (Updated 2024)

      April 18, 2024
    • 4

      A GOP operative accused a monastery of voter fraud. Nuns fought back.

      January 3, 2025
    • 5

      Top 9 Nickel-producing Countries (Updated 2024)

      April 23, 2024
    • 6

      Australian abolitionist, Grace Forrest, receives coveted ‘Freedom from Fear’ award

      April 13, 2024
    • 7

      LME Sanctions on Russian Metal Push Copper, Nickel and Aluminum Prices Higher

      April 17, 2024

    Categories

    • Business (1,028)
    • Investing (2,046)
    • Politics (2,977)
    • Uncategorized (20)
    • World (3,347)
    • About us
    • Contact us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: thriftybanker.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 thriftybanker.com | All Rights Reserved