The Fed: Fed saw ‘too much action’ vs. high inflation as less risky than ‘too little,’ minutes show

by | Oct 12, 2022 | Stock Market

Calling inflation “unacceptably high,” Federal Reserve leaders saw their strategy of fighting price pressures aggressively as less risky to the economy than doing too little, minutes of the bank’s last meeting show. The Fed approved another jumbo-size increase in U.S.interest rates at its Sept. 21-22 meeting. It also signaled plans for another pair of big increases before year end in a surprise to Wall Street
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The minutes of the Fed’s meeting underscore that top officials were disappointed and worried about persistently high inflation. “A sizable portion of the economic activity has yet to display much response,” the Fed minutes said. “Inflation had not yet responded appreciably to a policy tightening.” While some senior Fed officials also worried the bank could go too far and damage the economy, the majority appeared to believe it was vital for the central bank to squelch inflation, even if that meant keeping rates high for a prolonged period. “Many participants emphasized that the cost of taking too little action to bring down inflation likely outweighed the cost of taking too much action,” the minutes said. The Fed predicts the economy will eventually slow as rates rise, but it noted the labor market remains extremely tight. Fed officials also expressed concern that oil prices could rise again, …

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