At their June meeting, nearly all Federal Reserve officials suggested that while a slower approach might be necessary, policy tightening is not off the table. Choosing to hold off on increasing rates at this time, policymakers pointed to economic growth concerns and the lagged impact of previous policy decisions. Ten consecutive rate increases had been actioned prior, and this pause is seen as an opportunity to evaluate how these changes are impacting the economy’s march toward full employment and stable prices.
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The meeting minutes revealed an undercurrent of uncertainty and disagreement among the officials. The most aggressive monetary policy moves since the 1980s, totaling 5 percentage points, have cast doubt over economic activity, hiring, and inflation. While some argued for a modest increase based on a tight labor market and strong economic activity, the consensus leaned towards a slowing down of rate hikes. Post-meeting, Fed Chairman Jerome Powell reinforced the prevailing view, asserting that inflation still had some distance to cover before reaching the Fed’s 2% target. However, he affirmed a unified stance among the officials, with only two foreseeing no increase in rates by year-end.
