Against the backdrop of significantly slowing economic growth and a tight labor market, Federal Open Market Committee members agreed to raise the federal funds rate another 75 basis points at their recent Nov. 1-3 meeting, according to minutes released Wednesday.
Among other things, committee members observed “notable slowing in interest rate-sensitive sectors, particularly housing,” and noted that “with inflation remaining far too high and showing few signs of moderating, participants observed that a period of below-trend real GDP growth would be helpful in bringing aggregate supply and aggregate demand into better balance, reducing inflationary pressures, and setting the stage for the sustained achievement of the committee’s objectives of maximum employment and price stability.”
As the Fed continues raising rates, FOMC members acknowledged that the uncertainty associated with their economic outlooks remained high, and that “even though the tightening of monetary policy had clearly influenced financial conditions and had had notable effects in some interest rate-sensitive sectors, the timing of the effects on overall economic activity, the labor market, and inflation was still quite uncertain, with the full extent of the effects yet to be realized.”
