Federal Reserve authorities are determined to fight inflation and are expecting higher interest rates for some time ahead until the inflation is within the target range of Federal Reserve, as discussed in the Fed’s December meeting.
Federal Reserve policymakers at its December meeting raised interest rate by half a percentage point, and expressed the necessity of restrictive policy since inflation is unacceptably high.
The meeting summary stated, “Participants generally observed that a restrictive policy stance would need to be maintained until the incoming data provided confidence that inflation was on a sustained downward path to 2 percent, which was likely to take some time. In view of the persistent and unacceptably high level of inflation, several participants commented that historical experience cautioned against prematurely loosening monetary policy.”
Officials from Federal Reserve also expressed that they would focus on incoming data in the coming times and accordingly they will take the call regarding the policy.
The Federal Reserve’s preferred inflation gauge was at 4.7% yearly in November, considerably down from high of 5.4% in February 2022 but that is still well above the Federal Reserve’s 2% target.
