Policymakers at the US Federal Reserve have tracked higher prices for food, rent, and other essentials. Now they say they expect inflation to stay “uncomfortably high.”
Fed officials showed some of their thinking on Wednesday by releasing the minutes of their July policy meeting, during which they decided to raise their key interest rate by three-quarters of a percentage point. They made the same increase in June.
That is the Fed’s fastest pace of tightening since the early 1980s. And they have pointed to more rate hikes ahead. However, Chair Jerome Powell said at the July meeting briefing that slowing the pace of increases “likely will become appropriate.”
The minutes show policymakers already saw signs of a shift in the economy.
Consumer spending, business investment, and the housing market have all lost steam. Inflation is still at 8.5 percent. However, Fed officials suggest slower growth could set the stage for it to fall, gradually, to their target rate of 2 percent.
They noted that job gains have been “robust” and unemployment remains low. So, investors are expecting them to raise rates again when they meet for their policy meeting on September 20-21.