Fed policymakers agreed on more cautious policy mode – FOMC minutes

US Federal Reserve policymakers decided to proceed carefully with interest rates and opt for further increase in borrowing cost only if progress in controlling inflation slows, minutes of the latest policy meeting showed.

The Fed officials agreed in the last meeting that further tightening would be appropriate if incoming information indicated that progress towards FOMC’s inflation objective was insufficient, which showed slight divergence from the previous meeting’s opinion that another rate hike would be needed.

Less hawkish tone contributes to a general view that the Fed is likely done with raising interest rates, although still without official confirmation, as the policymakers continue to fight with two strong opposite forces – inflation, which is still well above Fed’s target and a negative impact on the economy from high borrowing cost.

Fed’s decision to introduce more cautious approach add to growing expectations of an end of tightening cycle that has lifted policy rate by 5.25% in less than two years, as well as increasing percentage of bets about the time when the central bank will start cutting interest rates, if inflation remains in a downward trajectory.