Fed minutes show more rate hikes will come in future at slower rate

By Ovunc Kutlu

ISTANBUL (AA) - The US Federal Reserve anticipates additional interest rate hikes in the future, albeit at a reduced pace, as indicated in the minutes from its two-day meeting on June 13-14.

"After rapidly tightening the stance of monetary policy last year, the Committee had slowed the pace of tightening and that a further moderation in the pace of policy firming was appropriate in order to provide additional time to observe the effects of cumulative tightening and assess their implications for policy," said the minutes released late Wednesday.

The Fed skipped an interest rate increase on June 14 and kept its federal funds rate unchanged between the range of 5% - 5.25%.

Chair Jerome Powell, in his post-meeting press conference, said the central bank can make two more interest rate increases in the remainder of this year in order to further slow inflation down.

The minutes said consumer prices figure in May "indicated that declines in inflation had been slower than they had expected."

Annual consumer inflation in the US came in at 4% in May, recording the lowest level in more than two years, and significantly easing from 4.9% in April.

The figure also marked a sharp decline from last June's 9.1% yearly gain, the largest since November 1981, due to the Fed's aggressive monetary tightening that saw a total of 500 basis points of interest rate increases in 10 meetings from March 2022 to this May.

"Given the continued strength in labor market conditions and the resilience of consumer spending, however, the staff saw the possibility of the economy continuing to grow slowly and avoiding a downturn as almost as likely as the mild-recession baseline," said the minutes.