FOMC minutes were released at 7:00 pm GMT today. Document related to the December 12-13, 2023 meeting, when the Federal Reserve left interest rate unchanged and issued updated macroeconomic projections, including dot-plot pointing to three 25 basis point rate cuts in 2024.
Minutes from December meeting offered no major surprises. It was noted that almost all participants saw lower rate levels at end-2024, but there was a word of caution included that rates may be kept at current levels for longer than is currently anticipated. Key takeaways from FOMC minutes:
- Staff economic outlook was broadly similar to the projection prepared for previous meeting
- Participants observed progress on inflation had been uneven across components, noted core services prices still rising at elevated pace
- A few participants suggested FOMC could face a trade-off between dual mandate goals in the period ahead
- Those participants pointed to downside risks to the economy associated with an overly restrictive stance
- A number of participants highlighted uncertainty around how long restrictive policy would need to be maintained
- FOMC members generally viewed addition of the word any to comments on possible additional firming as relaying their judgment that rates were likely at or near peak of cycle
- Several participants suggested it would be appropriate to begin discussing technical factors about slowing balance sheet run-off well before such a decision was reached
- Participants generally reaffirmed it would be appropriate for policy to remain restrictive until inflation was clearly moving down sustainably
- Participants generally stressed importance of maintaining a careful and data dependent approach
- In projections almost all participants indicated their base-line implied a lower federal funds rate would be appropriate by the end of 2024
- Several participants observed that circumstances might warrant keeping policy rate at current level longer than they currently anticipate
- Participants noted however outlooks were associated with unusually elevated uncertainty
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