Interest rate | US Federal Reserve officials signal cautious approach

(Washington) At their latest meeting, US Federal Reserve officials expressed caution about lowering interest rates too quickly, a signal that increases uncertainty about the central bank’s next steps.

Even if inflation continued to slow to the Fed’s 2% target, officials said “it would likely be appropriate to take incremental action” to lower rates, according to meeting minutes November 6 and 7.

The minutes do not give specific guidance on what the Fed will do at its next meeting on December 17-18. Most economists think officials will likely cut rates by a quarter point next month for the third time this year, but then could forgo cutting them at subsequent meetings.

In September, the Fed suggested it would cut its key rate up to four times next year, but since then, investors and economists have lowered their expectations. The economy is growing at a brisk pace, inflation is showing signs of stalling above the Fed’s target, and President-elect Donald Trump’s proposals, including higher tariffs, could also accelerate the inflation.

The Fed is trying to calibrate its policies so as not to lower rates too quickly and not let inflation start to rise again. On the other hand, she doesn’t want to reduce them too slowly, which could hamper hiring and growth.

If inflation remained too high, Fed officials could “pause” their rate cuts, according to the minutes, while if the economy slowed and unemployment rose, they could cut rates more quickly.