Fed Officials Expect to Maintain Tough Stance on Inflation for ‘Some Time’ – By Michael Rainey (The Fiscal Times) / Jan 4, 2023
At their most recent meeting in December, officials at the Federal Reserve made it clear that they remain committed to their effort to reduce inflation from its recent historic highs, even as inflationary pressure begins to show signs of easing.
According to the minutes of the December 13-14 meeting released Wednesday, Fed officials expressed concerns that the labor market in particular remains exceptionally tight, contributing to an ongoing risk that inflation may remain at unacceptably high levels.
“The risks to the inflation outlook remained tilted to the upside,” Fed officials said, per the minutes. “Participants cited the possibility that price pressures could prove to be more persistent than anticipated, due to, for example, the labor market staying tight for longer than anticipated.”
Add in a host of other uncertainties – including the end of Covid-19 restrictions in China and the war in Ukraine – and the bias of Fed officials appears to point toward higher rates maintained for a longer time. “Participants generally observed that a restrictive policy stance would need to be maintained until the incoming data provided confidence that inflation was on a sustained downward path to 2 percent, which was likely to take some time,” the minutes say. “In view of the persistent and unacceptably high level of inflation, several participants commented that historical experience cautioned against prematurely loosening monetary policy.”
