Early Morning! Federal Reserve, Major Announcement!
The latest meeting minutes released by the Federal Reserve send a strong signal. The minutes show that Federal Reserve officials decided to slow down the pace of interest rate cuts in the coming months due to inflation being higher than expected and the uncertain inflation impact of policies since Trump's administration. They believe that interest rates are close to or at a suitable moment to slow down rate cuts, as cutting rates too quickly may cause inflation pressures to rise again.
However, a key figure at the Federal Reserve, Waller, has a different view. On January 8, he stated that inflation will continue to decrease towards the 2% target, and he supports further rate cuts this year. He feels that the foundation of the U.S. economy is quite stable, the job market is good, and tariffs have little impact on inflation and monetary policy.
From the meeting minutes, officials feel that interest rates are about to reach a point where they should slow down rate cuts because cutting rates too quickly may cause inflation to rise again. They also mentioned that while inflation may get close to 2%, the process might take longer than previously thought, and deflation might even have stopped.
Moreover, many officials believe that the risks of rising inflation have increased, with reasons including recent high inflation data, potential changes in trade immigration policies, geopolitical issues, a loose financial environment, strong household spending, and rising housing prices.
Regarding employment, they expect the job market to remain quite stable, but they still need to monitor labor market indicators. Last month, when the Federal Reserve cut rates by 25 basis points, there were officials who opposed it, indicating significant internal disagreements on the rate cut issue within the Federal Reserve.
In summary, the future policy of the Federal Reserve will still depend on how the data changes, with no fixed timetable.