Federal Reserve officials agreed earlier this month that smaller rate increases should happen soon, as they assess the impact of their policy on the economy, according to minutes released Wednesday.
The publication of the minutes strengthened Wall Street’s position. Major indices closed higher. While the dollar continued its losses against the euro and the yen.
The summary of the meeting, which reflects statements made by several officials over the past several weeks, pointed to smaller rate increases to come.
Markets widely expect the Federal Open Market Committee, which sets interest rates, to adopt a 0.5 percentage point increase in December, after four consecutive rises of 0.75 percentage points.
Despite hinting that the moves will be less intense in the future, officials said they still see few signs of abating inflation.
However, some committee members expressed concern about the risks to the financial system if the Fed continues to move forward at the same strong pace. “A large majority of respondents felt that a slowdown in the pace of increase would be appropriate in the near future,” the minutes said.
The minutes noted that small increases will give policymakers an opportunity to assess the impact of a succession of price increases.
The central bank’s next interest rate decision will be on the fourteenth of next December.
The summary noted that some members noted that “slowing the pace of the increase could reduce the risk of instability in the financial system.” Others said they would like to wait to slow down. Officials said they see the balance of risks to the economy now tilted to the downside.
The minutes indicated that the final price may be higher than officials had previously thought. At the September meeting, committee members set a final interest rate on the funds of about 4.6 percent. Over the past few weeks, officials have spoken in unison about the need to continue fighting inflation, while indicating that they can back off the level of rate hikes. This means that there is a strong probability of an increase of 0.5 percentage points in December, but the trajectory remains uncertain thereafter.