by Howard Schneider
WASHINGTON (Reuters) – U.S. Federal Reserve (Fed) officials appeared more convinced last month that inflation was under control, noting lower risks, and expressed concern about the possible economic damage of a policy “excessively restrictive” monetary policy.
Therefore, indicates the minutes of the December meeting of the American central bank, published Wednesday, “almost all participants indicated (…) that a lower interest rate target would be appropriate by the end of 2024.
A “certain number of participants” highlighted the persistent uncertainty over the duration of maintaining a very strict policy, due to the progress made in the fight against inflation as part of the cycle of monetary tightening started in March 2022, it is written in the “minutes”.
At the end of its meeting on December 12-13, the Fed, as expected, kept its interest rates unchanged, indicating in its press release that the cycle of monetary tightening was coming to an end and signaling a drop in rates during the year that opens.
Illustration of the progress made by the institution to control the surge in prices, Fed officials did not qualify inflation as “unacceptably high” – a first since June 2022.
Since the December meeting of the American central bank, the markets have started to bet on a rate cut in March, against a backdrop of increased optimism on Wall Street where the main indices ended the past year sharply higher. .
“Nothing in the ‘minutes’ dissuades us from thinking that the Fed will start lowering interest rates starting in March,” commented Paul Ashworth, chief analyst at Capital Economics.
The minutes of the December meeting, however, do not give any details on the timetable envisaged by the Fed. Central bank officials noted “an unusually high degree of uncertainty” regarding the economic outlook, it is noted, with additional rate hikes not ruled out.
Participants in the meeting “emphasized … that it would be appropriate for policy to remain restrictive for some time, until inflation clearly declines toward the Fed’s 2% target.” .
(Reporting Howard Schneider, Ann Saphir and Lindsay Dunsmuir; Jean Terzian)
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