More interest rate increases are on the way if the minutes from the Federal Reserve’s June meeting are any indication.
Nearly all Federal Open Market Committee members believe additional policy tightening will be necessary in the future, even after the body stood pat on rates in June, according to the minutes released Wednesday afternoon.
The unanimous June pause came after 10 consecutive rate increases totaling 5 percentage points. According to the minutes, “leaving the target range unchanged at this meeting would allow them more time to assess the economy’s progress toward the Committee’s goals of maximum employment and price stability.“
Following the June meeting, 16 of the 18 members projected at least one more rate hike this year, with 12 members projecting two or more.
“The economy was facing headwinds from tighter credit conditions, including higher interest rates, for households and businesses, which would likely weigh on economic activity, hiring, and inflation, although the extent of these effect remained uncertain,” the minutes stated.
Last week, Fed Chair Jerome Powell told Congress that the central bank has “a long way to go” to bring inflation down to the Fed’s 2% target.
The major indexes slumped slightly in response to the news. About a half-hour after the 2 pm ET release of the minutes, the Dow was down 0.4% to 34,271.
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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