US Federal Reserve indicates further rate hikes

WASHINGTON: The United States  Federal Reserve officials indicated that more rate hikes could follow as they witnessed "little evidence" that inflation strains were subsiding, said the minutes of the Fed's latest policy meeting.

The minutes of the Federal Open Market Committee (FOMC) meeting from July 26–27 stated that "uncertainty about the medium-term course of inflation remained high, and the balance of inflation risks remained skewed to the upside, with several participants highlighting the possibility of further supply shocks arising from commodity markets."

Since March, the consumer price index (CPI) has been above 8%, and the July number increased by 8.5% from a year earlier, down from the previous month's new four-decade high but still at a high level.

\According to Fed policymakers, inflation would take some time to respond to tightening monetary policy and the related slowing in economic activity, and it would likely remain "uncomfortably high" for some time.

Participants believed that switching to "a restrictive attitude" of the policy rate in the near future would also be justified from a risk-management viewpoint given the elevated inflation and the upside risks to the inflation forecast.
Participants judged that elevated inflation could become entrenched if the public started to doubt the Committee's determination to sufficiently alter its stance on policy, according to the minutes.

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