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MNI POLICY: Fed Officials Clash On Extent Of Rate Restraint

U.S. central bank officials need more time to assess the impact of its interest rate hikes.

Federal Reserve policymakers are actively debating just how much restraint a 23-year high fed funds rate is exerting on the economy, with the FOMC's core leadership arguing policy is constraining the economy enough to bring inflation down to target but a number of officials worried monetary conditions might still be insufficiently restrictive.

One key point of agreement is that inflation is likely to continue to move down while labor markets loosening gradually and economic activity slows. However, officials differ on the degree of confidence they have in such an outcome -- minutes from the May meeting showed "various" members were open to additional tightening should a deterioration in the outlook warrant.

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Federal Reserve policymakers are actively debating just how much restraint a 23-year high fed funds rate is exerting on the economy, with the FOMC's core leadership arguing policy is constraining the economy enough to bring inflation down to target but a number of officials worried monetary conditions might still be insufficiently restrictive.

One key point of agreement is that inflation is likely to continue to move down while labor markets loosening gradually and economic activity slows. However, officials differ on the degree of confidence they have in such an outcome -- minutes from the May meeting showed "various" members were open to additional tightening should a deterioration in the outlook warrant.

Keep reading...Show less