For anyone who spent the last few months convinced that rate cuts were just around the corner, the Federal Reserve would like a word. Meeting minutes released recently show that most officials consider additional rate hikes a real possibility if inflation refuses to cooperate.
That’s not a typo. Hikes, not cuts. The central bank that spent 2022 and 2023 on the most aggressive tightening campaign in decades is essentially saying it’s willing to go back for seconds.
What the minutes actually say
The Fed’s latest meeting minutes paint a picture of a central bank that is decidedly not in a hurry to loosen monetary policy. Most officials indicated they view further rate increases as a plausible next step if inflationary pressures continue to run above the Fed’s 2% target, as measured by the Personal Consumption Expenditures price index.
Cleveland Fed President Beth Hammack put a finer point on it. She believes the federal funds rate is likely to remain in the 3.5% to 3.75% range for an extended period. And if inflation overshoots, she suggested rates may need to go higher.
