Washington [US], April 11 (ANI): US Federal Reserve officials expect it would not be appropriate to reduce the key interest rate until they gain “greater confidence” that inflation is moving sustainably toward a comfortable 2 per cent, minutes of its latest monetary policy meeting showed.
The central bank participants discussed the uncertainties around the economic outlook.
The minutes, released overnight Indian Standard Time, noted that the US central bank officials affirmed their strong commitment to returning inflation to the committee’s 2 per cent objective.
“The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 per cent,” the minutes’ document read.
Further, risks around the inflation forecast were seen as tilted slightly to the upside, on possible supply-side disruptions and unexpectedly persistent inflation dynamics.
Consumer price inflation in the US continued to trend down, though it remained above 2 per cent.
On Wednesday, the latest data showed inflation in the US increased more than expected in March, putting cold water to hopes of an interest rate cut shortly.
In the 12 months through March, the inflation increased 3.5 per cent year-on-year, the highest in about 6 months. This followed a 3.2 per cent rise in February.
In discussing the policy outlook, minutes showed that participants judged that the policy rate was likely at its peak for this tightening cycle, and almost all participants judged that it would be appropriate to move policy to a less restrictive stance at some point this year if the economy evolved broadly as they expected.
The US Federal Reserve, in its March meeting, voted to leave the key interest rate unchanged at 5.25-5.50 per cent, keeping the policy rate unchanged for the fifth straight time on the trot.
During the Covid-19 pandemic, the interest rates were near-zero. Raising interest rates is a monetary policy instrument that typically helps suppress demand in the economy, thereby helping the inflation rate decline.
The US central bank then indicated three interest rate cuts this year and affirmed that solid economic growth would continue.
The US Federal Reserve’s commitment has been to bring down consumer inflation to its target of 2 per cent. (ANI)
