While nowhere near becoming a leading option, some Federal Reserve officials are floating the idea of another interest rate increase if stubbornly persistent inflation does not show signs of easing soon.
Going into 2024, most market watchers were predicting three decreases in interest rates over the year. To date, none have been enacted and no target dates have been set for any. The Fed’s policy statements have said several months of declining inflation will be needed before any cuts are initiated.
Minutes from the April 30-May 1 Federal Open Market Committee meeting show some participants expressed a willingness to tighten policy further if more risks to inflation show up in the economy. Other officials, however, including Fed Chair Jerome Powell, have said they do not expect any interest rate increases in the immediate future.
Still, even with the benchmark rates at a 23-year high, they are not having the inflation-calming effects of previous efforts.
Since the minutes were released, retail sales and industrial production declines, along with a slowdown in job growth, have raised beliefs that the economy is slowing more than initially estimated. Fed officials remain generally optimistic and continue to believe inflation will eventually reach the long-sought 2% target. No one, however, is willing to state with any confidence when that could happen. (Source)