Fed eyes additional rate hikes, though risks of overshooting and undershooting converge

MADRID, 11 Oct. (EUROPA PRESS) -

Within the Federal Open Market Committee (FOMC) of the United States Federal Reserve (Fed), most of its members agreed that one or more interest rate increases would be "appropriate" to return inflation to the 2% target.

"The majority of participants believed that a further increase in the interest rate at a future meeting would probably be appropriate, while some considered it plausible that further increases would not be justified," the minutes of the last meeting from the end of September show. which kept rates unchanged.

In general, participants considered that, with the current restrictive monetary policy, the risks to the achievement of the Committee's objectives "have become more two-way", so that future decisions should be based on more data to "weigh the risks" properly.

"Participants noted that it was important to balance the risk of over-tightening with that of under-tightening," he summarized.

Likewise, several FOMC members pointed out that it was "likely" that interest rates will be at or near their peak. Given this, they have assured, the focus of monetary policy and the communication of the issuing institute must shift from 'what the rate level should be' to 'how long they should remain restrictive'.

On September 20, the Fed decided to maintain interest rates in a target range of between 5.25% and 5.50% after the eleven increases in the price of money undertaken since March 2022 and which placed its amount at the highest level since January 2001.

"The Committee will continue to evaluate additional information and its implications for monetary policy," the central bank indicated then.

To determine the degree of potential tightening that may be appropriate to return inflation to 2%, the Fed "will take into account the cumulative tightening of monetary policy, the lag with which monetary policy affects economic activity and inflation, and the development of economic and financial events".