On November 26, the Federal Reserve released the minutes of the monetary policy meeting held from November 6 to 7. The minutes showed that Federal Reserve officials expressed confidence that inflation was easing and the labor market was strong, and thus decided to further cut interest rates.
Specifically, the minutes showed that when discussing inflation developments, participants continued to note that U.S. inflation had eased significantly from its peak. Almost all participants believed that although the monthly trend of inflation would still fluctuate, the upcoming data was generally consistent with the expectation that inflation would continue to return to 2%. However, some participants pointed out that this process might take longer than previously expected.
In discussing labor market developments, participants generally agreed that the pace of job growth has slowed since earlier this year and that the unemployment rate has risen but remains low. Regarding the outlook for the labor market, participants generally noted that the risk of excessive cooling in the labor market has diminished since the Federal Reserve's September monetary policy meeting. Participants generally expected that the labor market would remain stable over time. However, participants believed that future labor market indicators still deserve close monitoring, and some participants still believed that the risk of a possible deterioration in the labor market was elevated.
Based on the discussion of US inflation and the labor market, when discussing monetary policy, the Fed officials decided to lower the target range of the federal funds rate by 25 basis points at the November monetary policy meeting, bringing its benchmark funds rate to a range of 4.5% to 4.75%. The minutes of the meeting showed that participants believed that further adjustments to the monetary policy stance would help maintain the strength of the US economy and labor market while continuing to push inflation further down.
In considering further adjustments to the target range for the federal funds rate, participants agreed that they would carefully assess incoming data, the changing outlook, and the balance of risks. All participants agreed that the post-meeting statement should reiterate the Fed's strong commitment to supporting maximum employment and returning inflation to its 2% target. Participants expected that if data were roughly in line with expectations, inflation continued to decline to 2% on a sustained basis, and the labor market remained stable, a gradual shift to a more neutral policy rate over time might be appropriate. In addition, they said there was uncertainty about when the Fed would need to pause its rate cuts before it reached a neutral rate that neither promoted nor suppressed economic growth.
As the latest meeting minutes show that the Fed is inclined to gradually cut interest rates, after the minutes were released, the market expects that the Fed will further cut interest rates in December. The Chicago Mercantile Exchange's "Federal Reserve Observation Tool" shows that the market currently expects the Fed to cut interest rates by 25 basis points in December. The probability is 63%, up 7 percentage points from 56% the previous day. #美国GDP数据即将公布