On April 13, Nick Timiraos, the “Fed microphone”, wrote that the minutes of the Federal Reserve meeting released today showed that officials considered not raising interest rates at the meeting last month, but finally believed that the regulators had eased the pressure on the banking industry. An interest rate of 25 basis points is reasonable.
Looking ahead, officials concluded that “they anticipated that some additional policy tightening might be appropriate” given price pressures and the strength of labor demand, the minutes said.
Nearly all of the 18 officials who participated in last month’s meeting projected that one more rate hike would be necessary this year (ie dot plot expectations).
Most expect the Fed to keep rates on hold thereafter if economic growth sluggishes this year and demand for labor cools.
Officials said they would closely monitor other indicators of economic activity, including the state of bank lending, as they consider their next steps.
But officials also signaled that the outlook for rates has become more uncertain after stress in the banking system intensified last month.