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Fed minutes suggest interest rate hikes could come faster than the market expects
Fed not equipped to get inflation under control: Market analyst
The Cow Guy Group founder Scott Shellady and TJM Investments managing director Tim Anderson analyze the impact of inflation and gas prices on the retail sector.
Most Federal Reserve officials agreed at their gathering earlier this month that they may need to raise interest rates more rapidly than the market anticipates at coming meetings in order to tame the hottest inflation in four decades.
Minutes from the U.S. central bank's May 3-4 meeting released on Wednesday show that policymakers stressed the need to raise interest rates quickly in order to bring consumer prices closer to their 2% goal. Officials voted unanimously to raise the benchmark federal fund rate by 50-basis points earlier this month, and agreed that similarly sized hikes are on the table at upcoming meetings in June and July.
HOW THE FEDERAL RESERVE MISSED THE MARK ON SURGING INFLATION
"Most participants judged that 50 basis point increases in the target range would likely be appropriate at the next couple of meetings," the minutes said. "Many participants judged that expediting the removal of policy accommodation would leave the committee well positioned later this year to assess the effects of policy firming and the extent to which economic developments warranted policy adjustments."
On top of that policymakers said that monetary policy may need to move past a "neutral" stance – meaning it does not restrict or accommodate economic growth – and that officials could need to adopt a more "restrictive" stance as they race to catch-up with inflation.