Central Banks
Fed Affirms Inflation Resolve, Pushes Back Against Rate-Cut Bets
- Officials warn against ‘unwarranted’ loosening of conditions
- Misperception of reaction function would complicate FOMC’s job
This article is for subscribers only.
Federal Reserve officials last month affirmed their resolve to bring down inflation and, in an unusually blunt warning to investors, cautioned against underestimating their will to keep interest rates high for some time.
Going into the meeting, markets were pricing in rate cuts in the second half of 2023. The tone of the minutes of the Federal Open Market Committee’s Dec. 13-14 gathering suggested frustration that this was undermining the central bank’s efforts to bring price pressures under control.