WASHINGTON—While the Fed opted not to raise rates at its June meeting, some members of its Federal Open Markets Committee did favor pushing rates up further, according to the minutes of the meeting just released by the Fed.
Those minutes indicate what many economists are expecting, which is the Federal Reserve will raise rates yet again during its next meeting on July 25-26 as it seeks to beat back inflation.
“The FOMC minutes reaffirm that the committee is leaning toward a hike later this month,” said NAFCU Vice President of Research and Chief Economist Curt Long. “Interim data could cause a change in course, but with just three weeks until the next meeting, time is running short. Credit unions should expect one hike in July and one additional hike in the fourth quarter."
A Pause, But…
As CUToday.info reported, at its June meeting the FOMC held its benchmark federal-funds rate steady in a range between 5% and 5.25%. That was the first such pause in rate raising following 10 consecutive increases since March 2022, and after years of near-zero rates.
The minutes show all 11 voting members of the FOMC agreed to the decision.
“Almost all participants judged it appropriate or acceptable” to hold rates steady last month given how high and rapidly the Fed had raised rates over the past year and because those moves will take time to influence economic conditions, the minutes said.
Open to Increases
But the minutes also suggest several of the 18 voting and nonvoting officials at the meeting would have been open to another rate increase, citing “momentum in economic activity had been stronger than earlier anticipated, and there were few clear signs that inflation was on a path to return to the committee’s 2% objective over time,” according to the minutes.
Data releases in May indicated a slowing of inflation, but consumer prices remained more than twice that 2% target.