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The Fed saw some signs at its last meeting that inflation was easing

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WASHINGTON (AP) — Federal Reserve officials saw little sign of inflationary pressures easing “before benchmark interest rates were raised by a substantial three-quarters of a point for the fourth consecutive time” at their latest meeting.

Rising wages, the result of a strong labor market, coupled with weak productivity growth, were “out of step” with the Fed’s ability to meet its annual inflation target of 2%, policymakers said on their November 1-2 agenda. concluded accordingly. meeting continues on Wednesday

But he also agreed that a smaller rate hike “would probably be appropriate soon.” The Fed is widely expected to delay rate hikes to a half-point increase at its next meeting in mid-December.

At their meeting earlier this month, Fed officials also expressed uncertainty about how long it would take them to raise rates in a slowing economy to reduce inflation. Chairman Jerome Powell stressed at a press conference after this month’s meeting that the Fed is not even close to declaring victory in its battle to curb high inflation.

Nevertheless, some policymakers expressed hope that falling commodity prices and reducing supply chain bottlenecks “should help moderate inflation over the medium term”. Earlier this month, the government reported that price increases eased in October as a sign that inflationary pressures may be starting to ease. Consumer inflation rose to 7.7% in October from a year ago and to 0.4% in September. The year-on-year increase was the smallest increase since January.

Wednesday’s minutes showed that Fed officials expected a sustained rate hike to prevent Americans from expecting inflation to continue indefinitely. When people expect higher inflation, they tend to act in a way that can fulfill those expectations themselves – for example, by demanding higher wages and spending vigorously before prices rise further. Doing.

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Fed officials noted that employers resisted layoffs even as the economy slowed, apparently “eager” to retain workers after a year and a half of severe labor shortages. The unemployment rate in the US is 3.7%, slightly above the lowest point in half a century.

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