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• Policy makers said that similar hikes would be necessary at the next several meetings
Minutes of the Federal Reserve’s May meeting showed that the officials stressed on the need to raise interest rates quickly and more aggressively than what markets may anticipate, to control inflation.
The policymakers saw the need to increase benchmark borrowing rates by 50 points, and added that similar hikes would be necessary at the next several meetings.
The minutes suggested that the Fed members were leaning towards more aggressive moves with respect to interest rate hikes and balance sheet reduction.
Bringing inflation down
The May 3-4 was the biggest rate increase in 22 years and came as the Fed is trying to pull down inflation running at a 40-year high.
Market- and survey-based measures of U.S. inflation expectations continued to project a significant deceleration in inflation in the coming years.
Concerns surrounding a tighter policy that could cause instability in both the Treasury and commodities market resurfaced. Specifically, the minutes cautioned about “the trading and risk-management practices of some key participants in commodities markets were not fully visible to regulatory authorities.”
Source - Federal Reserve
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