Federal Reserve officials are confident that inflation is easing and the labor market remains strong, allowing for further gradual interest rate cuts according to minutes from the November meeting. The meeting summary emphasized the Fed’s comfort with the pace of inflation and the strength of the job market. The Federal Open Market Committee members indicated that further rate cuts are likely, though no specific timing or degree was mentioned. The FOMC unanimously voted to lower the benchmark borrowing rate by a quarter percentage point to a target range of 4.5%-4.75%. Despite market expectations of another rate cut in December, uncertainty over President-elect Donald Trump’s policies has caused some hesitation.
The minutes revealed that officials discussed the outlook for monetary policy and anticipated moving gradually towards a more neutral stance if inflation continues to move sustainably towards 2% and the economy remains near maximum employment. There was no mention of the election in the minutes, but there was a general level of uncertainty about evolving conditions and how the rate cuts would need to stop before reaching a neutral interest rate.
Committee members spent much of the meeting discussing progress on inflation and stability of the economic outlook. They expressed confidence that inflation would return sustainably to 2% despite ongoing factors putting downward pressure on inflation. Policymakers also noted that the labor market conditions were generally solid, with no sign of rapid deterioration. Overall, despite conflicting signals on inflation and uncertainty surrounding President-elect Trump’s policies, Federal Reserve officials remain cautiously optimistic about the economic outlook and future interest rate cuts.
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