Highlights from the Sept 20-21 FOMC meeting minutes:
- Market participants generally anticipated a further slowing in the pace of rate increases after December
- Many participants emphasized that the cost of taking too little action to bring down inflation likely outweighed the cost of taking too much action.
- Several participants underlined the need to maintain a restrictive stance for as long as necessary, with a couple of these participants stressing that historical experience demonstrated the danger of prematurely ending periods of tight monetary policy designed to bring down inflation
- Several participants observed that as policy moved into restrictive territory, risks would become more two-sided, reflecting the emergence of the downside risk that the cumulative restraint in aggregate demand would exceed what was required to bring inflation back to 2 percent
- Participants observed that, as the stance of monetary policy tightened further, it would become appropriate at some point to slow the pace of policy rate increases while assessing the effects of cumulative policy adjustments on economic activity and inflation
- Many participants indicated that, once the policy rate had reached a sufficiently restrictive level, it likely would be appropriate to maintain that level for some time until there was compelling evidence that inflation was on course to return to the 2 percent objective
- Most participants remarked that, although some interest-sensitive categories of spending—such as housing and business fixed investment—had already started to respond to the tightening of financial conditions, a sizable portion of economic activity had yet to display much response
- Participants observed that a period of real GDP growth below its trend rate, very likely accompanied by some softening in labor market conditions, was required.
- Several participants noted that, particularly in the current highly uncertain global economic and financial environment, it would be important to calibrate the pace of further policy tightening with the aim of mitigating the risk of significant adverse effects on the economic outlook.
- Members agreed that recent indicators had pointed to modest growth in spending and production
- Full minutes
I don't see much here that's a surprise. The Fed and market are aligned with hiking to around 4.75% and then pausing. Markets are largely unmoved on the headlines.