US Federal Reserve officials agreed on the need to continue cutting interest rates, but only at a gradual level owing to the volatility in economic data, minutes released from the November meeting showed on Tuesday.
"In discussing the outlook for monetary policy, participants anticipated … it would likely be appropriate to move gradually toward a more neutral stance of policy over time," the minutes read.
The minutes showed that “many” participants on the 12-member rate-setting Federal Open Market Committee noted the volatility of economic data that made it difficult to identify trends in the outlook. Fed officials also noted the uncertainties around the level of the neutral rate, which is the point at which interest rates neither expand nor contract economic growth.
“Participants noted that monetary policy decisions were not on a preset course and were conditional on the evolution of the economy, and the implications for the economic outlook and the balance of risks,” the minutes read.
Fed officials during the meeting also stressed the importance of the FOMC “to make this clear as it adjusted its policy stance”.
“Many participants observed that uncertainties concerning the level of the neutral rate of interest complicated the assessment of the degree of restrictiveness of monetary policy and, in their view, made it appropriate to reduce policy restraint gradually,” the minutes read.
The uncertainty over the neutral rate also makes it difficult to assess how restrictive the Fed's current policy is, according to the minutes.
“This feeds into the Fed’s cautious approach towards future rate cuts as the equilibrium-fed funds rate is difficult to estimate in real time, and the central bank may not know if it has reached it until it has done too much,” Oxford Economics chief correspondent Ryan Sweet wrote in a note.
The Federal Reserve this month cut interest rates by 25 basis points to 4.50 to 4.75 per cent. That followed an initial interest rate cut by 50 basis points.
Since then, Fed officials have generally advocated for a gradual approach to returning to the neutral rate.
“Nothing in the economic data suggests that the Committee has any need to be in a hurry to get there,” Fed chairman Jerome Powell told reporters on November 7.
The Fed began its easing cycle in September after economic data showed inflation was decreasing towards its 2 per cent target, leading the Fed to move focus to protecting the US jobs market. The nation's unemployment rate remains low at 4.1 per cent.
Officials now see the central bank's dual risks – price stability and full employment – to be about in balance, which they say allows them to take a gradual approach in cutting rates.
Most investors still anticipate the Fed to cut interest rates again by 25 basis points in December, although now at a smaller margin than one month ago, according to CME Group data. The Fed is also due to release its updated economic projections at the end of its December 17-18 meeting.
Tuesday's minutes showed that officials avoided discussions about the 2024 presidential election, which was held two days before the central bank's rate decision.
Analysis
Maros Sefcovic is juggling multiple international trade agreement files, but his message was clear when he spoke to The National on Wednesday.
The EU-UAE bilateral trade deal will be finalised soon, he said. It is in everyone’s interests to do so. Both sides want to move quickly and are in alignment. He said the UAE is a very important partner for the EU. It’s full speed ahead - and with some lofty ambitions - on the road to a free trade agreement.
We also talked about US-EU tariffs. He answered that both sides need to talk more and more often, but he is prepared to defend Europe's position and said diplomacy should be a guiding principle through the current moment.
BIGGEST CYBER SECURITY INCIDENTS IN RECENT TIMES
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More on Quran memorisation:
The specs
Engine: 3.0-litre six-cylinder turbo
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Transmission: Eight-speed auto
Fuel economy, combined: 6.5L/100km
On sale: December
Price: From Dh330,000 (estimate)
The BIO
Favourite piece of music: Verdi’s Requiem. It’s awe-inspiring.
Biggest inspiration: My father, as I grew up in a house where music was constantly played on a wind-up gramophone. I had amazing music teachers in primary and secondary school who inspired me to take my music further. They encouraged me to take up music as a profession and I follow in their footsteps, encouraging others to do the same.
Favourite book: Ian McEwan’s Atonement – the ending alone knocked me for six.
Favourite holiday destination: Italy - music and opera is so much part of the life there. I love it.
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Killing of Qassem Suleimani
Match info
Who: India v Afghanistan
What: One-off Test match, Bengaluru
When: June 14 to 18
TV: OSN Sports Cricket HD, 8am starts
Online: OSN Play (subscribers only)
What are the influencer academy modules?
- Mastery of audio-visual content creation.
- Cinematography, shots and movement.
- All aspects of post-production.
- Emerging technologies and VFX with AI and CGI.
- Understanding of marketing objectives and audience engagement.
- Tourism industry knowledge.
- Professional ethics.
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Zayed Sustainability Prize
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WOMAN AND CHILD
Director: Saeed Roustaee
Starring: Parinaz Izadyar, Payman Maadi
Rating: 4/5
About Karol Nawrocki
• Supports military aid for Ukraine, unlike other eurosceptic leaders, but he will oppose its membership in western alliances.
• A nationalist, his campaign slogan was Poland First. "Let's help others, but let's take care of our own citizens first," he said on social media in April.
• Cultivates tough-guy image, posting videos of himself at shooting ranges and in boxing rings.
• Met Donald Trump at the White House and received his backing.
THE BIO
Born: Mukalla, Yemen, 1979
Education: UAE University, Al Ain
Family: Married with two daughters: Asayel, 7, and Sara, 6
Favourite piece of music: Horse Dance by Naseer Shamma
Favourite book: Science and geology
Favourite place to travel to: Washington DC
Best advice you’ve ever been given: If you have a dream, you have to believe it, then you will see it.
