Members of the Federal Reserve were split during their last meeting concerning the direction of interest rates, according to released minutes. Some argued for further increases due to slow progress in reducing inflation, while others believed slowing economic growth might remove the need for additional tightening. The minutes reveal a shift towards a more data-dependent approach for the continuation of the rate-hiking cycle. The removal of a key phrase from their post-meeting statement indicating that “additional policy firming may be appropriate” reflected this change.
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In the midst of varying future expectations, members concurred that the path of rate hikes, with ten increases totaling 5% since March 2022, wasn’t as certain. Participants emphasized closely monitoring incoming information and its implications for the economic outlook due to notable risks to objectives regarding maximum employment and price stability.
The discussion also encompassed banking industry challenges and the readiness of members to ensure adequate liquidity. There was, however, skepticism towards the likelihood of a rate cut this year, with Governor Christopher Waller expressing his inclination towards more hikes to tackle stubbornly high inflation.
Nevertheless, the ETFs that track the major indices — SPDR S&P 500 ETF Trust (SPY), SPDR Dow Jones Industrial Average ETF Trust (DIA), and Invesco QQQ Trust (QQQ) — remain under pressure following the release.
