iifl-logo-icon 1

Invest wise with Expert advice

By continuing, I accept the T&C and agree to receive communication on Whatsapp

  • Open Demat with exclusive Advice & Services
  • Get a dedicated Relationship Manager to help you grow your wealth
  • Exclusive advisory on 20+ trading & wealth-based investment options
  • One tap Investments, Automated trading & much more
  • Minimum 1 lakh margin required
sidebar image

Do minutes of Federal Reserve Meeting reveal any surprise regarding interest rates?

26 May 2022 , 03:24 PM

According to reports, minutes of the meeting of US Federal Reserve show that members of the Federal Reserve want US interest rates to be raised to 2.4%. This rate is currently perceived to be the neutral rate of interest for the US economy.
Neutral rate of interest is the rate of interest that neither gives a boost to the economy nor slows it down.  This means that US Federal Reserve members are at present more concerned about controlling inflation rather than about stimulating growth. They are willing to move to an interest rate level that does not encourage growth but can control inflation in the short term. Interest rate above the neutral level will start having a negative impact on economy; it will start reducing the rate of economic growth.
Many are drawing comfort from this report. They are interpreting it as the sign that US central bank will not opt for recession for controlling inflation. Recession means when the economy starts contracting. Contraction means negative GDP growth.  Two consecutive quarters of negative GDP growth is classified as a recession.
 But these minutes of meeting actually do not bring out any surprise or cause of hope. When a central bank tries to stabilize a rising rate of inflation it tries to take the interest rate to the neutral level. At the neutral level actual output or GDP of the economy becomes equal to its potential GDP and inflation rate stabilizes. Central banks follow the Taylor’s rule here. This rule is that for every 1% rise in inflation rate above the target inflation rate of the central bank, interest rate is raised by 0.5% point. Target inflation rate of US Federal Reserve is around 2%.

Related Tags

  • inflation
  • interest rate
sidebar mobile


Read More
Knowledge Centerplus

Logo IIFL Customer Care Number
1860-267-3000 / 7039-050-000

Logo IIFL Securities Support WhatsApp Number
+91 9892691696

Download The App Now

Knowledge Centerplus

Follow us on


2024, IIFL Securities Ltd. All Rights Reserved

  • Prevent Unauthorized Transactions in your demat / trading account Update your Mobile Number/ email Id with your stock broker / Depository Participant. Receive information of your transactions directly from Exchanges on your mobile / email at the end of day and alerts on your registered mobile for all debits and other important transactions in your demat account directly from NSDL/ CDSL on the same day." - Issued in the interest of investors.
  • KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary.
  • No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account."

www.indiainfoline.com is part of the IIFL Group, a leading financial services player and a diversified NBFC. The site provides comprehensive and real time information on Indian corporates, sectors, financial markets and economy. On the site we feature industry and political leaders, entrepreneurs, and trend setters. The research, personal finance and market tutorial sections are widely followed by students, academia, corporates and investors among others.

  • 9 out of 10 individual traders in equity Futures and Options Segment, incurred net losses.
  • On an average, loss makers registered net trading loss close to Rs. 50,000.
  • Over and above the net trading losses incurred, loss makers expended an additional 28% of net trading losses as transaction costs.
  • Those making net trading profits, incurred between 15% to 50% of such profits as transaction cost.
Copyright © IIFL Securities Ltd. All rights Reserved.

Stock Broker SEBI Regn. No: INZ000164132, PMS SEBI Regn. No: INP000002213,IA SEBI Regn. No: INA000000623, SEBI RA Regn. No: INH000000248

We are ISO 27001:2013 Certified.

This Certificate Demonstrates That IIFL As An Organization Has Defined And Put In Place Best-Practice Information Security Processes.


Get better recommendations & make better investments

Invest wise with Expert advice

By continuing, I accept the T&C and agree to receive communication on Whatsapp