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U.S. Federal Reserve officials at their June policy-setting committee meeting said they were looking for more favorable data on inflation to gain more confidence that things were moving in the right direction, minutes released on Wednesday showed.
In it At the end of that meeting held on June 11-12, the Federal Open Market Committee (FOMC) had decided to hold the federal funds rate steady at a 23-year high of 5.25%-5.50%. The committee in its statement It also acknowledged that there had been “modest further progress” towards its 2% inflation target.
According to the US Bureau of Economic Analysis, the core personal consumption expenditures (PCE) price index – widely considered the Federal Reserve's preferred gauge of inflation – has been inching closer to the central bank's 2% target, having slowed from a 2.9% year-over-year increase in January to a 2.6% rise in May.
“Participants noted that some of this (modest) further progress was evident in the smaller monthly change in the core PCE price index and a lower trimmed average inflation rate for April, with the (consumer price index) reading for May providing additional evidence,” the latest minutes said.
“Participants said that additional supportive data were needed to provide greater confidence that inflation was moving sustainably toward 2 percent,” the minutes added.
The minutes come a day after Federal Reserve Chairman Jerome Powell told a European Central Bank event that recent U.S. economic data showed signs of “resuming its disinflationary trend.” He stopped short, however, of declaring victory against inflation.
“In discussing the outlook for monetary policy, participants noted that progress in reducing inflation had been slower this year than they had expected last December,” the minutes said.
“They emphasized that they did not expect it to be appropriate to lower the target range for the federal funds rate until additional information emerged that gave them greater confidence that inflation was moving sustainably toward the Committee's 2 percent objective,” it said. minutes aggregate.
Along with inflation, a highly resilient labor market and low unemployment have been other key reasons for the Fed to continue to hold interest rates steady.
The minutes showed that participants had noted many labor market indicators pointing to a “reduced degree of rigidity” in conditions, including a declining job vacancy rate, a lower quit rate, increases in economically motivated part-time employment, a lower hiring rate, a further decline in the ratio of job vacancies to unemployed workers, and a gradual rise in the unemployment rate.
Still, “several participants specifically emphasized that with the labor market normalizing, further weakening in demand may now generate a larger unemployment response than in the recent past, when lower labor demand was felt relatively more through fewer job vacancies,” the minutes added.
The twelve voting members of the FOMC at the June meeting were: Chairman Jerome Powell, Vice Chairman John Williams, Thomas Barkin, Michael Barr, Raphael Bostic, Michelle Bowman, Lisa Cook, Mary Daly, Philip Jefferson, Adriana Kugler, Loretta Mester, and Christopher Waller.
