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FOMC Minutes Suggest Slowing Pace Soon, USD Weaker In Aftermath

FED
  • (MNI) Fed officials at their November meeting supported slowing the pace of interest rate hikes "soon" to give them time to observe the effects of higher rates on the economy and inflation, according to the minutes of the meeting released Wednesday, signaling a 50 basis point increase was likely next month.
  • • At the same time, the FOMC also stressed that rates are likely to peak at a level "somewhat higher" than they had earlier expected due to stronger-than-expected inflationary pressures.
  • "A substantial majority of participants judged that a slowing in the pace of increases would likely soon be appropriate," the minutes said.
  • But, "various participants noted that, with inflation showing little sign thus far of abating, and with supply and demand imbalances in the economy persisting, their assessment of the ultimate level of the federal funds rate that would be necessary to achieve the Committee's goals was somewhat higher than they had previously expected."
  • A fairly limited reaction in the immediate aftermath of the release, however the USD has continued its softer tone in the following minutes. EURUSD trades just shy of 1.04 after very briefly breaching that level.
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