Fed minutes July 2022: - CNBC

The FOMC on Wednesday released minutes from its July 26-27 meeting, when it raised interest rates by 0.75 percentage point. SkipNavigationMarketsBusinessInvestingTechPoliticsCNBCTVWatchlistInvestingClubPROMenuVIDEO1:5201:52Fedanticipatesfurtherratehikesahead,needstomovetorestrictiveterritoryPowerLunchFederalReserveofficialsattheirJulymeetingindicatedtheylikelywouldnotconsiderpullingbackoninterestratehikesuntilinflationcamedownsubstantially,accordingtominutesfromthesessionreleasedWednesday.Duringameetinginwhichthecentralbankapproveda0.75percentagepointratehike,policymakersexpressedresolvetobringdowninflationthatisrunningwellabovetheFed'sdesired2%level.Theydidnotprovidespecificguidanceforfutureincreasesandsaidtheywouldbewatchingdatacloselybeforemakingthatdecision.Marketpricingisforahalf-pointratehikeattheSeptembermeeting,thoughthatremainsaclosecall.Meetingparticipantsnotedthatthe2.25%-2.50%rangeforthefederalfundsratewasaroundthe"neutral"levelthatisneithersupportivenorrestrictiveonactivity.Someofficialssaidarestrictivestancelikelywillbeappropriate,indicatingmoreratehikestocome."WithinflationremainingwellabovetheCommittee'sobjective,participantsjudgedthatmovingtoarestrictivestanceofpolicywasrequiredtomeettheCommittee'slegislativemandatetopromotemaximumemploymentandpricestability,"theminutessaid.ThedocumentalsoreflectedtheideathatoncetheFedgetscomfortablewithitspolicystanceandseesithavinganimpactoninflation,itcouldstarttotakeitsfootoffthepolicybrake.Thatnotionhashelpedpushstocksintoastrongsummerrally."Participantsjudgedthat,asthestanceofmonetarypolicytightenedfurther,itlikelywouldbecomeappropriateatsomepointtoslowthepaceofpolicyrateincreaseswhileassessingtheeffectsofcumulativepolicyadjustmentsoneconomicactivityandinflation,"theminutessaid.However,thesummaryalsostatedthatsomeparticipantssaid"itlikelywouldbeappropriatetomaintainthatlevelforsometimetoensurethatinflationwasfirmlyonapathbackto2percent."RemainingsensitivetodataVIDEO3:5903:59Fedlanguageisconsistentwithourbasecasefor50bpsratehike,saysBofA'sBhavePowerLunchOfficialsnotedthatfutureratedecisionswouldbebasedonincomingdata.Buttheyalsosaidtherewerefewsignsthatinflationwasabating,andtheminutesrepeatedlystressedtheFed'sresolvetobringdowninflation.Theyfurthernotedthatitlikelywould"takesometime"beforepolicykickedinenoughtohaveameaningfulimpact.TheconsumerpriceindexwasflatforJulybutwasup8.5%fromayearago.AseparatemeasuretheFedfollows,thepersonalconsumptionexpenditurespriceindex,rose1%inJuneandwasup6.8%yearoveryear.PolicymakersworriedthatanysignsofwaveringfromtheFedwouldmakethesituationworse."ParticipantsjudgedthatasignificantriskfacingtheCommitteewasthatelevatedinflationcouldbecomeentrenchedifthepublicbegantoquestiontheCommittee'sresolvetoadjustthestanceofpolicysufficiently,"theminutessaid."Ifthisriskmaterialized,itwouldcomplicatethetaskofreturninginflationto2percentandcouldraisesubstantiallytheeconomiccostsofdoingso."ThoughtheFedtooktheunprecedentedstepsofhikingthree-quartersofapointatsuccessivemeetings,marketshavebeeninrallymodelatelyonhopesthatthecentralbankmightsoftenthepaceofincreasesheadingintothefall.Sincetherecentbottominmid-June,theDowJonesIndustrialAverageisupmorethan14%.TheminutesnotedthatsomemembersworriedtheFedcouldoverdoitwithratehikes,underscoringtheimportanceofnotbeingtiedtoforwardguidanceonmovesandinsteadfollowingthedata.TVWATCHLIVEWATCHINTHEAPPUPNEXT|ETListenTVWATCHLIVEWATCHINTHEAPPUPNEXT|ETListen