Most Fed officials at last meeting backed slower rate hikes

Most Federal Reserve officials at their last meeting favored reducing the size of their interest rate hikes “soon”— just before raising their benchmark rate by a substantial three-quarters of a point for a fourth straight time.

The central bank’s policymakers saw “very few signs that inflation pressures were abating.” Still, a “substantial majority” of the officials felt that smaller rate hikes “would likely soon be appropriate,” according to the minutes of their Nov. 1-2 meeting released Wednesday. The Fed is widely expected to raise its key shortterm rate, which affects many consumer and business loans, by a half-point when it next meets in midDecember.

“Slowing the pace would give the (Fed) the ability to assess the economic landscape and see where they’re at, “Jennifer Lee, senior economist at BMO Capital Markets, wrote in a research report. “Short of some wild inflation report before the next meeting, (a half percentage point hike) sounds very reasonable in December. But the Fed is clearly not finished yet.”

Rising wages, the result of a strong job market, combined with weak productivity growth, were “inconsistent” with the Fed’s ability to meet its 2% target for annual inflation, the policymakers concluded, according to the minutes.

At that meeting, the Fed officials also expressed uncertainty about how long it might take for their rate hikes to slow the economy enough to tame inflation. Chair Jerome Powell stressed at a news conference after the meeting that the Fed wasn’t even close to declaring victory in its fight to curb high inflation.