11/25/22, 11:52 PM Minutes show Fed offi­cials backed slower rate hikes

Minutes show Fed offi­cials backed slower rate hikes

The Wall Street Journal · 25 Nov 2022 · A2 · B Y NICK TIMIRAOS

WASHINGTON—Most Fed­eral Reserve offi­cials thought they should slow the

pace of interest-rate increases after approv­ing a 0.75-per­cent­age­point rate
rise at their meet­ing earlier this month to battle high infla­tion.
Their dis­cus­sion at the meet­ing, described in minutes of the gath­er­ing released
Wed­nes­day, sug­gests they could down­shift to a rate rise of 0.5 per­cent­age
point, or 50 basis points, at their meet­ing next month.
“A sub­stan­tial major­ity of par­ti­cipants judged that a slow­ing in the pace of
increase would soon be appro­pri­ate,” the minutes said.
Offi­cials approved the fourth con­sec­ut­ive super­size rate increase at their Nov.
1-2 meet­ing, bring­ing their bench­mark rate to a range between 3.75% and 4%.
They are boost­ing rates at the fast­est pace since the early 1980s to reduce
infla­tion that is run­ning near a 40-year high.
All 19 offi­cials at the meet­ing sup­por­ted the decision to raise rates this month
and broadly agreed they needed to keep lift­ing them, the minutes showed. Still,
the dis­cus­sion revealed some were more anxious about the pos­sib­il­ity of over­-
do­ing the increases, while oth­ers wor­ried they might not be mak­ing enough
pro­gress to war­rant a down­shift.
Some from the first camp said the risks were rising that the Fed’s rate
increases might ulti­mately “exceed what was required to bring infla­tion back”
to their 2% goal. A few also warned that con­tinu­ing to raise rates in 0.75-point
incre­ments “increased the risk of instabil­ity or dis­lo­ca­tions in the fin­an­cial
sys­tem,” the minutes said.
A small minor­ity believed it might be bet­ter to wait to slow increases until rates
were “more clearly in restrict­ive ter­rit­ory and there were more con­crete signs
that infla­tion pres­sures were reced­ing sig­ni­fic­antly,” the minutes said.

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