The Federal Reserve anticipates that interest rate cuts will be implemented gradually, according to recently released minutes from the November 6–7 meeting of the policy-making Federal Open Market Committee (FOMC).
At that meeting, FOMC members overwhelmingly voted to lower the federal funds rate by 25 basis points, to a new range of 4.5–4.75 percent, signaling further loosening of restrictive monetary policy.
The meeting summary indicated that officials are confident that inflation is moving sustainably toward the institution’s objective of 2 percent. The Fed could rapidly ease policy if there were sudden weakness in the labor market or the broader economy, the document said.
“In discussing the outlook for monetary policy, participants anticipated that if the data came in about as expected, with inflation continuing to move down sustainably to 2 percent and the economy remaining near maximum employment, it would likely be appropriate to move gradually toward a more neutral stance of policy over time,” the minutes stated….