WASHINGTON (AP) 鈥� Nearly all Federal Reserve policymakers agreed earlier this month to slow the pace of their rate increases to a quarter-point, with only 鈥渁 few鈥� supporting a larger half-point hike.
The minutes from said most of the officials supported the quarter-point increase because a slower pace 鈥渨ould better allow them to assess the economy鈥檚 progress鈥� toward reducing inflation to their 2% target.
The increase raised the Fed鈥檚 benchmark rate to a range of 4.5% to 4.75%, the highest level in 15 years. It followed a half-point rate increase in December and four three-quarter-point hikes before that.
The central bank鈥檚 rate hikes typically lead to more expensive mortgages, auto loans, credit card borrowing and business lending. Last year's three-quarter-point rate hikes marked the fastest pace of credit tightening in four decades.
At this month's meeting, Fed officials unanimously agreed that 鈥渙ngoing increases鈥� in the Fed鈥檚 key rate 鈥渨ould be appropriate,鈥� which points to additional hikes in the next two meetings, at least.
Overall, the minutes released Wednesday showed that the Fed's policymakers emphasized their determination to keep rates high to curb inflation even as they welcomed a slowdown since the fall.
The broad consensus among the central bank officials to continue raising rates is notable, economists said. At the time of their meeting early this month, most government data was suggesting that the economy was cooling and that inflation was steadily slowing.
More recent data, though, has signaled a potential resurgence of growth as well as sustained inflation pressures. In response, Fed officials may signal when they next meet in March that they're considering additional rate hikes and the prospect of keeping rates high long after they have stopped raising them.
Omair Sharif, president of Inflation Insights, said he thinks the Fed will forecast more rate hikes at next month's meeting, to a range of 5.5% to 5.75%, a half-point higher than the policymakers had projected in December.
Both Loretta Mester, president of the Federal Reserve Bank of Cleveland, and James Bullard, president of the St. Louis Fed, said last week that they had supported half-point increases in the Fed鈥檚 key rate at the Feb. 1 meeting. The minutes said 鈥渁 few鈥� officials supported a larger increase. This suggests that one or two more officials on the central bank鈥檚 19-member rate-setting committee were in Mester and Bullard's camp. The Fed does not disclose how each policymaker voted at its rate-setting meetings.
Still, the minutes' emphasis on widespread support for a quarter-point increase suggests that the Fed may continue to raise rates by the smaller increment despite a string of robust economic data. Last week, Thomas Barkin, president of the Richmond Fed, at future meetings, even after new government figures showed the outlook for inflation becoming more worrisome.
At a news conference after the Fed's meeting ended Feb. 1, Chair Jerome Powell had stressed that inflation, while still too high, was gradually cooling. He also suggested that it was still possible that the Fed could quell inflation without raising rates so high as to cause widespread layoffs and a deep recession.
鈥淭he disinflationary process has started,鈥� Powell said then, referring to the steady slowdown in year-over-year inflation from a peak of 9.1% in June to .
But since then, a succession of economic reports has pointed to a still-robust economy despite the Fed鈥檚 eight rate hikes over the past year. , and revised figures show that price pressures remain high and might require more Fed rate hikes than many had assumed.
Last week, a government report showed that , and the year-over-year figure barely slowed last month, to 6.4%.
In the past three months, so-called core prices, which exclude volatile food and energy costs, have risen at a 4.6% annual rate. That is below the year-over-year number and suggests that more declines are coming. But that figure is up from 4.3% in December.
With the economy now looking stronger and inflation more persistent, economists expect the Fed to raise its key rate higher this year than previously projected. Many now envision the central bank boosting its benchmark short-term rate to a range of 5.25% to 5.5%.
That would be three-quarters of a point higher than its current level and a quarter-point higher than the Fed had projected in December. The prospect of higher borrowing rates for companies and individuals has , with stock prices falling and bond yields rising sharply this month.
Christopher Rugaber, The Associated Press
