U.S.
Federal
Reserve
Chair
Jerome
Powell
holds
a
press
conference
following
a
two-day
meeting
of
the
Federal
Open
Market
Committee
on
interest
rate
policy
in
Washington,
U.S.,
May
1,
2024.
Kevin
Lamarque
|
Reuters
Federal
Reserve
officials
grew
more
concerned
at
their
most
recent
meeting
about
inflation,
with
members
indicating
that
they
lacked
the
confidence
to
move
forward
on
interest
rate
reductions.
Minutes
from
the
April
30-May
1
policy
meeting
of
the
Federal
Open
Market
Committee
released
Wednesday
indicated
apprehension
from
policymakers
about
when
it
would
be
time
to
ease.
The
meeting
followed
a
slew
of
readings
that
showed
inflation
was
more
stubborn
than
officials
had
expected
to
start
2024.
The
Fed
targets
a
2%
inflation
rate,
and
all
of
the
indicators
showed
price
increases
running
well
ahead
of
that
mark.
“Participants
observed
that
while
inflation
had
eased
over
the
past
year,
in
recent
months
there
had
been
a
lack
of
further
progress
toward
the
Committee’s
2
percent
objective,”
the
summary
said.
“The
recent
monthly
data
had
showed
significant
increases
in
components
of
both
goods
and
services
price
inflation.”
The
minutes
also
showed
“various
participants
mentioned
a
willingness
to
tighten
policy
further
should
risks
to
inflation
materialize
in
a
way
that
such
an
action
became
appropriate.”
Several
Fed
officials,
including
Chair
Jerome
Powell
and
Governor
Christopher
Waller,
have
said
since
the
meeting
that
they
doubt
the
next
move
would
be
a
hike.
The
FOMC
voted
unanimously
at
the
meeting
to
hold
its
benchmark
short-term
borrowing
rate
in
a
range
of
5.25%-5.5%,
a
23-year
high
where
it
has
been
since
July
2023.
“Participants
assessed
that
maintaining
the
current
target
range
for
the
federal
funds
rate
at
this
meeting
was
supported
by
intermeeting
data
indicating
continued
solid
economic
growth,”
the
minutes
said.
Since
then,
there
have
been
some
incremental
signs
of
progress
on
inflation,
as
the
consumer
price
index
for
April
showed
inflation
running
at
a
3.4%
annual
rate,
slightly
below
the
March
level.
Excluding
food
and
energy,
the
core
CPI
came
in
at
3.6%,
the
lowest
since
April
2021.
However,
consumer
surveys
indicate
increasing
worries.
For
instance,
the
University
of
Michigan
consumer
sentiment
survey
showed
the
one-year
outlook
at
3.5%,
the
highest
since
November,
while
overall
optimism
slumped.
A
New
York
Fed
survey
showed
similar
results.
Stocks
held
in
negative
territory
while
Treasury
yields
were
mostly
higher
following
the
minutes
release.
Upside
inflation
risk?
Fed
officials
at
the
meeting
noted
several
upside
risks
to
inflation,
particularly
from
geopolitical
events,
and
noted
the
pressure
that
inflation
was
having
on
consumers,
particularly
those
on
the
lower
end
of
the
wage
scale.
Some
participants
said
the
early
year
increase
in
inflation
could
have
come
from
seasonal
distortions,
though
others
argued
that
the
“broad-based”
nature
of
the
moves
means
they
shouldn’t
be
“overly
discounted.”
Committee
members
also
expressed
worry
that
consumers
were
resorting
to
riskier
forms
of
financing
to
make
ends
meet
as
inflation
pressures
persist.
“Many
participants
noted
signs
that
the
finances
of
low-
and
moderate-income
households
were
increasingly
coming
under
pressure,
which
these
participants
saw
as
a
downside
risk
to
the
outlook
for
consumption,”
the
minutes
said.
“They
pointed
to
increased
usage
of
credit
cards
and
buy-now-pay-later
services,
as
well
as
increased
delinquency
rates
for
some
types
of
consumer
loans.”
Officials
were
largely
optimistic
about
growth
prospects
though
they
expected
some
moderation
this
year.
They
also
said
they
anticipate
inflation
ultimately
to
return
to
the
2%
objective
but
grew
uncertain
over
how
long
that
would
take,
and
how
much
impact
high
rates
are
having
on
the
process.
Immigration
was
mentioned
on
multiple
occasions
as
a
factor
both
helping
spur
the
labor
market
and
to
sustain
consumption
levels.
Market
lowering
rate-cut
expectations
Public
remarks
from
central
bankers
since
the
meeting
have
taken
on
a
cautionary
tone.
Fed
Governor
Waller
on
Tuesday
said
that
while
he
does
not
expect
the
FOMC
will
have
to
raise
rates,
he
warned
that
he
will
need
to
see
“several
months”
of
good
data
before
voting
to
cut.
Last
week,
Chair
Jerome
Powell
expressed
sentiments
that
weren’t
quite
as
hawkish
in
tone,
though
he
maintained
that
the
Fed
will
“need
to
be
patient
and
let
restrictive
policy
do
its
work”
as
inflation
holds
higher.
Markets
have
continued
to
adjust
their
expectations
for
cuts
this
year.
Futures
pricing
as
of
Wednesday
afternoon
after
the
release
of
the
minutes
indicated
about
a
60%
chance
of
the
first
reduction
still
coming
in
September,
though
the
outlook
for
a
second
move
in
December
receded
to
only
a
bit
better
than
a
50-50
coin
flip
chance.
Earlier
this
year,
markets
had
been
pricing
in
at
lease
six
quarter-percentage
point
cuts.
