Nearly all Fed officials support future increases

7 Jul 2023 , 08:29 AM

Despite voting unanimously to maintain the status quo, the Federal Reserve’s officials were not as united as their vote may have suggested. Some were in favour of raising interest rates while others supported the shift.

According to the minutes from the June 13–14 meeting, ‘almost all participants considered it appropriate or acceptable to maintain the target range for the federal funds rate at 5% to 5.25%.’ ‘Some participants indicated that they were in favour of or could have supported a proposal to raise the target range for the federal funds rate by 25 basis points at this meeting.’

Tight employment markets and the paucity of indications that inflation was falling toward the 2% target were cited by officials in favour of an increase.

The minutes made clear just how difficult a decision it was for policymakers to make. Nearly all officials stated that more increases would probably be warranted even though rates were left unchanged, with the majority highlighting the need of post-meeting messaging in conveying that message.

The readout offers more explanation to Fed observers who were confused by the decision to maintain rates in a target range of 5% to 5.25% while also predicting further hikes later this year.

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