The Federal Reserve is surprised by the state of the US economy. This is much better than expected, but interest rates will still not fall. We have read the minutes of the December meeting.
The Federal Reserve has just published the so-called “minutes” of the last meeting of the Federal Open Market Committee, which is the equivalent of our Monetary Policy Board. The document shows that even at this level, the data on the US economy caused a surprise.
Fed surprised by economic data
“Forecast presented by analysts at the December FOMC meeting was not as weak as a month ago” — read in the FOMC minutes. “The latest data suggests that real GDP growth in the second half of 2022 was stronger than previously forecast. At the same time, the forecast continues to show a clear slowdown in 2023.” We also read.
Unacceptably high inflation
Committee members also agreed that inflation, which is well above the Fed’s inflation target, remains unacceptably high. At the same time, it was noticed that product prices are falling, which is a good forecast for the market.
Participants of the December meeting are very cautious about the possible easing of monetary policy. They believe that it is necessary to take very responsible steps strictly on the basis of macroeconomic data. Therefore, we can assume that there can be no talk of lowering interest rates in the US yet. According to a report after the FOMC meeting, not a single member of the Federal Open Market Committee saw fit to vote to cut interest rates. This is a clear signal that the committee is extremely unanimous on this issue.
Source: Wprost
