Fed policymakers keep hopes that inflation will continue to cool – FOMC minutes

The minutes of the US Federal Reserve April 30 / May 1 FOMC policy meeting showed that policymakers believe that price pressures will continue to ease and head towards 2% target in coming months.
 

The latest inflation data from the US, which was released after the policy meeting, showed fresh easing in consumer prices, adding to hopes of the central bankers that the worst is already behind us.

However, Fed officials expressed their concerns whether the current interest rate level is high enough to keep inflation in the downward trajectory, leaving on the table possibility of further rate hikes if overall situation deteriorates, despite the recent comments from Fed Chair Powell that further rate hikes are unlikely.

The US central bank kept its current policy rate at 5.00%-5.25% during the past few meetings, following the recent upticks in inflation, which signaled that Fed’s mission in putting inflation under full control hasn’t been accomplished yet, but prevailing expectations of policymakers that inflation will move to the target over a medium term, brings the dash of optimism.

Adding to positive signals was overall condition of the US economy which remained resilient, due to milder than expected impact of high interest rates on the economy, as well as positive development in the labor market, which adds some brighter colors to the overall picture. 

Overall, more optimism could be seen from the latest comments, though all options are likely to remain open, signaling that the Fed may further prolong the start of its monetary policy easing, which was already rescheduled twice from initial expectations for the first rate cut in March this year.