Most Federal Reserve officials last month still regarded high inflation as an ongoing threat that could require further interest rate increases, in keeping with the minutes of their July 25-26 meeting released Wednesday.
At the identical time, the officials saw “numerous tentative signs that inflation pressures could be abating.” It was a mixed view that echoed Chair Jerome Powell’s noncommittal stance about future rate hikes at a news conference after the meeting.
Based on the minutes, the Fed’s policymakers also felt that despite signs of progress on inflation, it remained well above their 2% goal. They “would want to see more data … to be confident that inflation pressures were abating” and on target to return to their goal.
On the meeting, the Fed decided to boost its benchmark rate for the eleventh time in 17 months in its ongoing drive to curb inflation. But in a press release after the meeting, it provided little guidance about when — or whether — it would raise rates again.
![Shoppers on 5th Avenue in New York](https://nypost.com/wp-content/uploads/sites/2/2023/08/NYPICHPDPICT000012041823.jpg?w=1024)
Most investors and economists have said they imagine July’s rate hike can be the last. Earlier this week, economists at Goldman Sachs projected that the Fed will actually begin to cut rates by the center of next yr.
Since last month’s Fed meeting, more data has pointed within the direction of a “soft landing,” through which the economy would slow enough to cut back inflation toward the central bank’s 2% goal without falling right into a deep recession. The Fed has raised its key rate to a 22-year high of about 5.4%.
Inflation has cooled further, in keeping with the newest readings of “core” prices, a closely watched category that excludes volatile food and energy costs. Core prices rose 4.7% in July a yr earlier, the smallest such increase since October 2021. Fed officials track core prices, which they imagine provide a greater read on underlying inflation.
Overall consumer prices rose 3.2% in July compared with a yr earlier, above the previous month’s pace because of upper gas and food costs. Still, that is way below the height inflation rate of 9.1% in June 2022.
![Fed Chair Jerome Powell](https://nypost.com/wp-content/uploads/sites/2/2023/08/NYPICHPDPICT000023422067.jpg?w=1024)
That progress has been made without the sharp increase in unemployment that many economists had expected would follow the Fed’s sharp series of interest rate hikes, the fastest in 4 a long time. The unemployment rate actually ticked all the way down to 3.5% in July, near the bottom level in a half-century.
Hiring has slowed, nonetheless, with employers having added 187,000 jobs in July, a solid gain but roughly one-third of the pace of monthly job growth earlier this yr.
Still, the Fed now faces upticks in gas and some food prices, which could keep overall inflation from falling much further in the approaching months. And rising costs for services, from auto insurance to restaurant meals to dental services, could keep core inflation persistently high.
In an indication that not less than some officials think the Fed is nearing the top of its rate hikes, the minutes said “a number” of policymakers think their benchmark rate is high enough to restrain the economy.
These officials also think the chance of raising rates too high is roughly equal to the chance of not raising them high enough. That marks a big shift from earlier this yr, when the Fed routinely said the foremost risk was tilted toward not doing enough to slow borrowing and spending.
Data this week suggests that the economy, if anything, is picking up, which could keep inflation sticky at its current elevated level. Consumers are still spending at a healthy pace. A report Tuesday showed that retail sales rose faster than expected last month, fueled by rising online shopping and healthy sales at restaurants and bars, amongst other categories.
The Fed’s decision in July to boost rates for an eleventh time was unanimous, an indication that the officials remain largely unified whilst their decisions turn into more fraught. The minutes, though, said that two officials favored keeping the Fed’s rate unchanged last month, out of the 18 that took part within the meeting. At the very least one or each could be among the many officials who lacked a vote last month. Only 11 officials currently vote on the Fed’s rate policies.
Because the meeting, Fed officials have expressed contrary views. On Tuesday, Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, said he wants the Fed to maintain its options open for an additional rate hike.