The Fed may only consider “a certain amount of additional monetary tightening” to be appropriate.
(Photo: Reuters)
Washington At the monetary policy meeting in March, several US monetary authorities considered an interest rate pause in view of the banking crisis. This emerges from the minutes of meetings of the Federal Reserve published on Wednesday.
Ultimately, however, they rejected this idea. Also because the central bankers considered the Fed’s crisis measures after the collapse of two US regional banks to be sufficient to calm the situation in the financial sector.
The Fed continued its series of rate hikes last month despite the turmoil in the banking industry. The key monetary rate was raised for the ninth time in a row – by a quarter of a percentage point to the range of 4.75 to 5.0 percent.
This means that the provisional peak in interest rates should soon be reached, especially since inflation recently fell significantly to 5.0 percent. At the March meeting, the Fed also deleted a passage from its text that further rate hikes should be appropriate.
Instead, the Fed only considers “some additional monetary tightening” as possibly appropriate. On the futures markets, a further interest rate hike at the beginning of May is considered more likely than a pause – also because the overheated labor market is only gradually cooling down.
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The US currency guardian Mary Daly left it open how monetary policy will continue. “Looking ahead, there is good reason to believe that more policy tightening may be needed to bring down inflation,” San Francisco Fed District Chair said in Salt Lake City, Utah. But there are also good reasons to assume that the economy will cool down even without additional monetary policy steps.
More: US inflation rate continues to decline – but it is too early to give the all-clear