Federal Reserve Meeting Minutes: More Policymakers Ready to Pave the Way for Rate Hikes

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ME News: On May 21 (UTC+8), concerns among Federal Reserve officials from last month about the Iran war driving inflation higher were further heightened, with more and more officials saying the Federal Reserve should lay the groundwork for possible rate hikes. This suggests that incoming Fed Chair Warsh will take over a decision-making team that is becoming increasingly hawkish. In addition, most policymakers at the April meeting said that if inflation continues to remain above the 2% target, further tightening may be required. The minutes show: “To address this possibility, many participants said they prefer to remove language that implies a more dovish tilt in future interest rate decisions.” These Fed meeting minutes, considered “the most divided in generations,” further reveal two major shifts in the camps welcoming Warsh’s arrival: a hawkish camp that is growing in size, remains alert to inflation caused by the Iran war, and opposes any discussion of rate cuts, and a dovish camp that still tends toward rate cuts but is increasingly fading. The main reason pushing policymakers further toward the hawkish side remains inflationary pressure, which has been exacerbated by the war. The minutes show that the April meeting was the second consecutive meeting in which more policy officials believed that if inflation stays above target, rate hikes may be warranted. (Source: BlockBeats)
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