WASHINGTON (Reuters) – Uncertainty over the trajectory of the U.S. economy, including difficulties in assessing the health of financial markets and potential oil price shocks, prompted Federal Reserve officials to adopt a cautious stance in September , shows the minutes of the last meeting of the American central bank.
“A vast majority of participants continued to view the outlook for the economy as highly uncertain,” was written in the “minutes” released Wednesday of the meeting at which Fed officials discussed the need or not additional rate increases.
They agreed on September 20 to pause the cycle of monetary tightening that began in March 2022 to stem galloping inflation, even though a majority of 12 officials to 7 indicated in new forecasts that an additional increase Rates may be needed by the end of the year to bring inflation closer to the 2% target.
Data volatility and revisions to past statistics have contributed to complicating analysis of the economy, minutes of the Sept. 19-20 meeting show, as have the degree to which higher borrowing costs could weigh on businesses and consumption.
This favored the option of caution to “determine the extent of monetary tightening that might be appropriate,” the minutes said.
While the global commodity market and the strength of the American real estate market could lead to higher inflation, it is noted, the tension in financial markets and the global economic slowdown, as well as recent strike movements in the United States, represent a risk for economic growth and employment.
(Reporting Howard Schneider; Jean Terzian)
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