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

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ME News: On May 21 (UTC+8), Federal Reserve officials grew increasingly concerned last month that the war with Iran could push up inflation, with more officials saying the Fed should pave the way for possible rate hikes. This suggests that incoming Fed Chairman Warsh will take over a decision-making team that is becoming increasingly hawkish. In addition, most policymakers said at their April meeting that if inflation continues to persistently exceed the 2% target, further tightening may be needed. The meeting minutes showed: "To address this possibility, many participants said they would prefer to remove language that implies a dovish bias in future interest rate decisions." The minutes, described as the "most divided in generations," further revealed two shifts in the camps welcoming Warsh's arrival: a growing hawkish camp vigilant about inflation caused by the Iran war and opposed to any discussion of rate cuts, and a dovish camp still leaning toward rate cuts but increasingly marginalized. The main driver of policymakers' further tilt toward hawkishness remains inflation pressures, which have been exacerbated by the war. The minutes showed that the April meeting was the second consecutive meeting in which more policy officials believed that if inflation remains above target, rate hikes may be warranted. (Source: BlockBeats)
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