Aug. 18, 2023 at 7:15 am

Fed may hike interest rates again

August 18, 2023no commentNo tags

Another interest rate hike is still on the table, according to federal reserve officials.

The newly-released minutes from the Federal Open Market Committee’s July 25-26 meeting show that while some officials were prepared to continue June’s interest rates hike pause, members continue to view inflation as a threat and are willing to hike rates further to address it.

Most participants “continued to see significant upside risks to inflation, which could require further tightening of monetary policy,” according to the minutes.

The Fed in July raised its short-term benchmark fed funds rate by a quarter percentage point to a target range of 5.25% to 5.50%, the highest level in 22 years, following a rate hike pause in June.

Will the Fed hike rates again?

While participants acknowledged that there has been a softening in core goods prices and other “tentative signs that inflation pressures could be abating,” they also stressed that inflation remained “unacceptably high” and said they would need more evidence to be sure inflation was heading toward the committee’s 2% goal.

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Investors are predicting another rate hike pause next month, but it’s not yet clear how the Fed will act. Chair Jerome Powell in July said that “it’s certainly possible we would raise (rates) again at the September meeting and it’s also possible we would hold steady.”

‘A couple’ members wanted to continue pause

The minutes revealed that “a couple” of FOMC participants said they would have supported leaving interest rates unchanged.

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