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    Fed Minutes Suggest Further Rate Increases to Fight Inflation


    At its most recent January 31-February 1 meeting, the Federal Open Market Committee (FOMC) of the Federal Reserve voted to increase the Fed funds rate by 25 basis points, to a target range of 4.5%-4.75%. Despite the majority of the Committee’s members agreeing to the increase, two dissenting voices favored a larger 50 basis point hike. The minutes from the meeting, released today, provided insight into the Fed’s likely plans to raise interest rates again in the coming months.

    The minutes indicated that “all participants continued to anticipate that ongoing increases in the target range for the federal funds rate would be appropriate to achieve the Committee’s objectives.”[0] The hawkish monetary policy seeks to raise the benchmark Fed funds rate to a target just above 5%, and keep the rate elevated until incoming data provide confidence that inflation is on a sustained downward path to 2%.

    Inflation “remained well above” the Fed's 2% target, the minutes stated, with labor markets “remaining very tight, contributing to continuing upward pressures on wages and prices.”[1] The Fed wants “substantially more evidence of progress across a broader range of prices” in order to be confident that inflation is on a downward path.[2] The minutes noted that “a number of participants observed that a policy stance that proved to be insufficiently restrictive could halt recent progress in moderating inflationary pressures.”[0]

    St. Louis Fed President James Bullard has already said he favored a 50 basis point rate hike at the last meeting, and in a recent speech reiterated that keeping the fed interest rates in a range of 5.25% to 5.5% would help bring inflation back towards the 2% target.[3] Additionally, the market is now predicting that a 25-basis-point hike is likely coming at the March, May and June meetings, and that the Fed’s funds rate could peak around 5.36%.

    In conclusion, the FOMC’s minutes suggest that the Fed will continue to raise interest rates, most likely by another full percentage point from the current 4.5%.[4] While the stock market has staged an impressive rebound so far this year, markets are still trying to adjust to the reality that the Federal Reserve is unlikely to pivot and is instead still focused on fighting inflation.[5] Investors should be prepared for interest rates to stay higher for longer.

    0. “Fed officials back ongoing rate hikes to quell above-target inflation: Fed minutes By”, 22 Feb. 2023,

    1. “Major Averages Close Narrowly Mixed Following Fed Minutes” RTTNews, 22 Feb. 2023,

    2. “February Fed Minutes: Rate Hikes To Continue” Forbes, 22 Feb. 2023,

    3. “Fed minutes: ‘Ongoing' rate hikes needed, 2 officials wanted 50-point hike” Yahoo News, 22 Feb. 2023,

    4. “Fed Inclined Toward More Hikes to Curb Inflation, Minutes Show” Yahoo! Voices, 22 Feb. 2023,

    5. “Stock market news today: S&P 500, Dow fall after Fed minutes signal continued rate hikes” Yahoo News, 22 Feb. 2023,

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