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Fed Members Support Push to Restrictive Stance on Rates to Tame Inflation

Economy Aug 17, 2022 02:47PM ET
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© Reuters

By Yasin Ebrahim

Investing.com -- Federal Reserve members were unified in their view that pushing interest rates to a restrictive level was needed to bring down inflation toward the central bank’s target, the minutes of Fed’s 26-27 July meeting showed Wednesday.

At the conclusion of its previous meeting on July. 27, the Federal Open Market Committee raised its benchmark rate by 0.75% to a range of 2.25% to 2.5%.

"Participants noted that ... moving to an appropriately restrictive stance of policy was essential for avoiding an unanchoring of inflation expectations," the minutes showed.

In the press conference that followed the monetary policy statement, Fed Chairman Powell signaled that the central bank may consider a pause on rate hikes after the September meeting to assess the impact of tightening on the economy and inflation.

At the July meeting there appeared to be support among members to reassess the pace of tightening at some point, the minutes showed, though some were in favor of maintaining the Fed's benchmark rate at a "sufficiently restrictive level" for some time to ensure that inflation was firmly on a path back to 2%.

Since the July fed meeting, economic data including signs of easing inflation and a surge in monthly jobs have bolstered bets on less hawkish rate hikes.

Fed members, however, were quick to push back against the prospect of easing the pace of monetary policy tightening, and reiterated that the fight against inflation is far from over. Earlier this month, San Francisco Federal Reserve Bank President Mary Daly stated that “inflation remains far too high and not near our price stability goal.”

The slower pace of inflation seen last month was mainly driven by falling energy prices, but core inflation, which excludes food and energy, will prove key to determining whether inflation will remain higher for longer.

“All eyes will be focused on how sticky is core inflation…that's going to start driving the next leg of this inflation discussion,” Robert Conzo, CEO of The Wealth Alliance told Investing.com in an interview on Tuesday.

The Fed has hiked rates by 225 basis points, or 2.25% in just five months, prompting worries that the central bank could overdo do it on monetary policy tightening, pushing the economy into a recession.

While the Fed has repeatedly pointed to a strong jobs market as an indicator of economic strength, the central bank is “starting to get concerned about recessionary fears,” Conzo said, adding that the prospect of a 50 basis point rate hike for September is “priced in.”

Further clues on monetary policy are just a week away as investors await commentary from Powell at the Jackson Hole Economic Symposium on Aug. 25-27.

Fed Members Support Push to Restrictive Stance on Rates to Tame Inflation
 

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Comments (23)
Ian Just
Ian Just Aug 18, 2022 5:57AM ET
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FED doing great. Their purpose is to create balance and efficiency in the economy, so all useless tech, crypto, margins bubbles will continue to shrink until disappear . Really sorry for some investors but It's time money to flow in real economy and everyones to spent their money more efficiently.
me ish
me ish Aug 18, 2022 5:57AM ET
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laughable - the FED and other central banks around the world created a vast amount of free cash - trillions and trillions - whilst no increase in GDP - in fact quite the opposite - there will be huge systemic inflation for years to come until they pull all this extra liquidity out of the global economy and that will create a deep depression - that's the way economics works - anything else is just pure propaganda and market manipulation to sucker in retail investors whilst the big boys just keep making more and more trillions at the expense of the rest of us - it's all by design.
Matt Kay
Matt Kay Aug 18, 2022 5:57AM ET
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Hey there granpa, i told you to stay in the basement and not talk about ridonculous nonsense anyamore
Brad Albright
Brad Albright Aug 18, 2022 5:57AM ET
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me ish Look out behind you: Boo!
First Last
First Last Aug 18, 2022 5:57AM ET
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me ish   Most of that extra cash/liquidity has been ending up in the hands of the rich. It's how the system works.  Taxing the rich is one way to alleviate this, but the Republicans oppose this, and oppose also fixing the system.
Ciprian Gal
Ciprian Gal Aug 17, 2022 7:13PM ET
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November elections!!!!
Brad Albright
Brad Albright Aug 17, 2022 7:13PM ET
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Thanksgiving dinner!
Erikke Evans
Erikke Aug 17, 2022 6:04PM ET
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This is so amusing. Every time a recession rears it's head the Fed feeds the public the illusion that they're in control...until things fall apart and they panic.
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Eddie Garcia
Eddie Garcia Aug 17, 2022 6:04PM ET
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They don't panic, they just pretend that they're panicking. They know how to steal wealth efficiently.
me ish
me ish Aug 17, 2022 6:04PM ET
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First Last  March 2020 - huge stimulus as the powers that be decided to destroy the global economy by shuttingi it all down over a bad cold!!!
First Last
First Last Aug 17, 2022 6:04PM ET
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Nils Hullmann   In 2018, the Fed was in middle of series of 0.25% rate hikes.  0.25% doesn't indicate panic.  There was no recessionary pressure and inflation was low.  Only thing Fed may mildly panic about was that Trump was threatening Fed independence..
Brad Albright
Brad Albright Aug 17, 2022 6:04PM ET
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me ish THIS IS ALL TRUE!!! I WAS HAVING DRINKS WITH THE POWERS THAT BE LAST NIGHT AND i ASKED THEM, DID YOU GIRLS DECIDE TO DESTROY THE GLOBAL ECONOMY BY SHUTTING IT DOWN OVER A BAD COLD? AND THEY SAID, OF COURSE! EVERYONE KNOWS WE DO BEST WHEN THE ECONOMY GRINDS TO A HALT. THEY LAUGHED AT ME AND GAVE ME ANOTHER SHOT OF ADRENACHROME.
First Last
First Last Aug 17, 2022 6:04PM ET
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me ish   The market bottomed in March 2020.  The Fed was so effective I doubt they panic much.
Aaron Bermea
Aaron Bermea Aug 17, 2022 5:43PM ET
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yes. manipulation is a factor. play the game. it's been a rough 3 days, we will rally tomorrow and rest of week. bad news is bullish, but it still catch up. i like the rest of August, until maybe the last week.. remember, they are greedy. i see one more nice leg up before we should sell, and wait for tons of selling in September. hopefully we can catch the next leg up this month, before we cash out and wait for a nice little bottom in fall, maybe not retest lows, but buy back lower for sure. good luck to all. let's catch this last rally for August on bad news tomorrow!
JIM VETTER
JIM VETTER Aug 17, 2022 4:45PM ET
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The Fed is a joke
Marco cuevas
Marco cuevas Aug 17, 2022 4:03PM ET
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Powell nas no problem robbing nard working americans of their 4p1k retirememt plans ...how much nas ne robbed js of our 4p1ks already tbleeding cintinues but ne dont care because ne goes home to nis mansion.
Brad Albright
Brad Albright Aug 17, 2022 4:03PM ET
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Mork, is that you!
Jack AAA
Jack_A Aug 17, 2022 3:47PM ET
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market doesn't care
First Last
First Last Aug 17, 2022 3:47PM ET
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What you care about and how much you care are different for the market.  Learn empathy and to think like the market.
Johanes Joni Pasila
Johanes Joni Pasila Aug 17, 2022 3:35PM ET
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Bad news, bearish signal
Karam Ayyash
Karam Ayyash Aug 17, 2022 3:32PM ET
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karm
Mitchel Pioneer
Mitchel Pioneer Aug 17, 2022 3:27PM ET
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More flagrant manipulation "in late trade."  The criminally manipulated JOKE just can't drop below 34K.  I don't know how anyone can take this criminal enterprise seriously, let alone count on this rigged casino for their retirement.
rob mann
rob mann Aug 17, 2022 3:27PM ET
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Soon will all come crashing down. Pensions will be wiped out however Biden will soon agree to a bail out for US pension plans. Alreary planed out.... Very sad day for the US
First Last
First Last Aug 17, 2022 3:27PM ET
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Dow is below 34k.  Tell us again about how it's so predictable  ;-)
Al Patrone
Alpatrone Aug 17, 2022 3:27PM ET
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yeap
Brad Albright
Brad Albright Aug 17, 2022 3:27PM ET
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First Last What is predictable is the number of upvotes these kooky comments get. It doesn't matter what the premise is, what the conclusion is or if there is any logic between them. Just post something that implies some sinister control by some fill-in-the-blank, and it appears to be an explanation to people who are confused.
First Last
First Last Aug 17, 2022 3:27PM ET
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Brad Albright   Reminds me of retrumplicans saying they support Trump because he's a businessman when he inherited/grifted his wealth and has a bad track record w/ bankruptcies.
 
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