Federal Reserve officials were largely in agreement on leaving interest rates unchanged last month, minutes from the central bank's last policy meeting indicated, while pointing to tighter conditions over the coming months in order to bring inflation back closer to its preferred 2% target.
The minutes, taken from the Fed's policy meeting that ended on June 14, reflect both the central bank's official statement, as well as comments from Chairman Jerome Powell to lawmakers on Capitol Hill last month, that followed its decision to hold rates steady at between 5% and 5.25%, the highest since 2007, following a string of ten consecutive increases.
Powell said late last month that the central bank's inflation fight has a "long way to go" and that further interest rate hikes will likely be needed to tame consumer-price pressures over the coming months.
He later told a panel discussion on monetary policy at the European Central Bank's annual retreat in the costal Portuguese city of Sintra, Powell said that a "strong majority' of his colleagues see the need for "two or more" rate hikes between now and the end of the year, adding that the labor market continues to pull the U.S. economy into solid growth.
"Almost all participants judged it appropriate or acceptable to maintain the target range for the federal funds rate at 5 to 5.25% at this meeting." the minutes read. "Most of these participants observed that leaving the target range unchanged at this meeting would allow them more time to assess the economy’s progress toward the Committee’s goals of maximum employment and price stability."
"In discussing the policy outlook, all participants continued to anticipate that, with inflation still well above the Committee’s 2% goal and the labor market remaining very tight, maintaining a restrictive stance for monetary policy would be appropriate to achieve the Committee’s objectives," the minutes added. "Almost all participants noted that in their economic projections that they judged that additional increases in the target federal funds rate during 2023 would be appropriate."
U.S. stocks were little-changed following the release of the minutes at 2:00 pm Eastern time, with the Dow Jones Industrial Average down 123 points on the session and the S&P 500 falling 8 points.
Benchmark 10-year note yields were pegged at 3.939%, while 2-year notes changed hands at 4.940%. The dollar index, which tracks the greenback against a basket of six global currencies, was up 0.22% to 103.261.
The CME Group's FedWatch now indicates an 88.7% chance of a 25 basis point hike later this month, up from 81.6% at the close of trading on June 30, with bets on another rate hike in November hovering at around 36%.
