Federal Open Market Committee members unanimously agreed to leave the target range for federal funds rate at 5.25% to 5.5% during their Oct. 31-Nov. 1 meeting, but they also said they needed to see more data before they felt confident that inflation was returning to the Federal Reserve’s 2% goal, according to minutes from the meeting released today.
The FOMC has raised rates 11 times since early 2022, but the Oct. 31-Nov. 1 meeting marked the second consecutive meeting where committee members left the target range untouched. During the meeting, FOMC members said they had seen significant tightening in financial conditions in recent months, but many were uncertain whether that tightening would persist and to what extent it reflected expectations for tighter policy or other factors, according to the minutes. They also noted a high degree of uncertainty concerning the U.S. economic outlook.
While taking a wait-and-see approach on the question of whether to once again raise rates, FOMC members agreed that monetary policy needed to remain restrictive until inflation is clearly moving toward the Fed’s 2% goal, according to the minutes. They also reiterated that the banking system is sound and resilient, although many commented that there are areas that warrant further monitoring, such as unrealized losses in assets resulting from the rise in longer-term interest rates and some banks’ exposure to commercial real estate. Read more.