FOMC voted unanimously to pause rate hikes in June: Fed minutes

“Some participants indicated that they favored raising the target range for the federal funds rate 25 basis points at this meeting or that they could have supported such a proposal,” the Fed minutes showed.

Those in favor of another hike “noted that the labor market remained very tight, momentum in economic activity had been stronger than earlier anticipated, and there were few clear signs that inflation was on a path to return to the Committee’s 2 percent objective over time,” the Fed said.

In the end, almost all participants judged it appropriate or acceptable to maintain” the federal funds rate at the existing 5% to 5.25%, the minutes said. 

“Most of those participants observed that leaving the target range unchanged at this meeting would allow them more time to assess the economy’s progress,” toward returning inflation to 2% from its current level more than twice that.

At the June 13-14 meeting, the Federal Open Market Committee (FOMC) voted unanimously to pause interest rate hikes after 10 consecutive increases, giving policymakers more time to assess the impact of rate hikes and recent banking stresses on the US economy.

At the same time, FOMC members forecast that two additional increases to its benchmark lending rate would likely be needed before the end of the year to bring inflation back down.

At the congressional testimony, Fed Chair Jerome Powell had reiterated his view that more interest rate hikes are likely in the months ahead to tame inflation.

The minutes published Wednesday showed that, ahead of the last meeting, Fed economists still forecast the United States would enter a “mild recession” later this year, “followed by a moderately paced recovery.”

But the Fed said strong labor market and consumer spending data meant its staff “saw the possibility of the economy continuing to grow slowly and avoiding a downturn as almost as likely as the mild-recession baseline.”

(With inputs from agencies)

Updated: 06 Jul 2023, 02:59 AM IST