While admitting disappointment with recent higher-than-expected inflation data, Federal Reserve (Fed) officials indicated at their latest meeting that they still believe inflation pressures will ease. on prices, even slowly, shows the minutes of the meeting published on Wednesday.
They “noted that they continue to expect inflation to return to (the objective of) 2% in the medium term”, it is written in the ‘minutes’ of the monetary policy meeting of the April 30-May 1.
However, US central bank officials said they expected “disinflation to take longer than previously anticipated”.
This situation implies for the moment “maintaining” the Fed’s key rate at its current level, indicates the report, which reveals a discussion on a potential additional increase in interest rates.
“Various participants indicated a willingness to tighten policy further if risks to inflation materialize in a way that would make action appropriate,” the document says, with unusual rhetoric. Words like “some” or “many” are traditionally used to give an idea of how many officials have expressed a specific opinion.
The debates also focus on the more or less restrictive nature of the monetary policy in force given the solidity of the economy – an important issue since the Fed wants a “sufficiently” restrictive policy to control inflation.
Following the meeting concluded on May 1, Fed officials dampened expectations of an imminent rate cut. Financial markets are currently expecting a decline in September.
Although they noted the risk of further inflationary pressures, US central bank officials broadly view the first quarter data as merely a setback towards a return to the 2% target.
(Written by Howard Schneider; French version Jean Terzian)
