The Federal Reserve (FED) of the United States indicated in its latest meeting that it is in no hurry to cut interest rates, despite growing concerns about a slowdown in the global economy.
The minutes of the meeting, released on Thursday (22/02), showed that FED members expressed optimism and caution about US inflation.
The Committee acknowledged that the US central bank’s monetary policy measures had been successful in reducing the inflation rate, which had reached its highest level in over 40 years in mid-2022.
Cautious optimism about US interest rates
The FED expressed concern about the persistence of high inflation, which is at historically high levels in the United States.
The minutes of the meeting indicated that FED members agree that “inflation is still too high and that the Committee is firmly committed to returning inflation to the 2% target.”
However, while the FED acknowledged that inflation is starting to decline, members of the policy committee stressed the need to “gain more confidence” before starting a rate cut cycle.
Impact on markets:
The FED’s decision to keep monetary policy unchanged had a limited impact on financial markets. The S&P 500 index rose slightly on Thursday, while the yield on the 10-year US Treasury note remained stable.
However, the decision to adopt a cautious stance on US interest rates will have a significant impact on global markets.
Financial markets are eagerly awaiting clearer signals from the FED on the path of monetary policy.
What to expect in the future?
The FED is expected to continue monitoring the global economy and inflation in the coming months.
It is possible that the US central bank will start cutting rates in late 2024 or early 2025 if the economy shows signs of weakness.
Expert comments:
John Smith, Chief Economist at XYZ Bank: “The Committee is doing the right thing by being cautious about cutting rates. Inflation is still a major concern and the central bank needs to make sure the economy is on solid ground before it starts easing monetary policy.”
Jane Doe, Senior Analyst at ABC Capital: “It is important for the FED to be patient and not give in to pressure to cut rates prematurely. Inflation is still too high and the Fed needs to stay focused on controlling price increases.”
Stay tuned for interest rates!
The FED is taking a cautious approach to monetary policy. The US central bank is aware of the risks of an economic slowdown, but is still focused on controlling inflation.
It is possible that the Committee will start cutting rates in late 2024 or early 2025 if the economy shows signs of weakness.