Federal Reserve April Meeting Minutes: Rate cuts are not appropriate until inflation falls to 2%

ChainCatcher news, according to Caixin, at 2 AM Beijing time on Thursday, the Federal Reserve released the minutes of its policy meeting from April 30 to May 1. As the market expected, Fed officials emphasized that, based on disappointing inflation data, the policy interest rate needs to be maintained at current levels for a longer period than previously anticipated.

In the decision announced on May 1, the Federal Reserve's monetary policy committee kept the benchmark interest rate unchanged for the sixth consecutive time at 5.25%-5.50%. It also announced that starting in June, the pace of reducing its Treasury holdings would be cut from $60 billion per month to $25 billion.

The minutes indicated that the committee members believed that, compared to last year's persistent decline in inflation, there has been a lack of progress in recent months towards a further decline towards the 2% target. While some members attempted to explain the rise in January data as "an unusually large seasonal distortion," or "some long-term volatile price items pushing up inflation," other members pointed out that "price increases are widespread, and you should not overlook this."

After a series of discussions, the committee members reached one of the most important conclusions in the entire report: interest rate cuts may have to wait a bit longer. The participants noted that they continue to expect inflation to return to 2% in the medium term; however, recent data has not increased their confidence in a decline in inflation. Therefore, the process of reducing inflation may take longer than previously expected. Several participants even expressed that if the risks of further inflation rising manifest in some form, they would be willing to tighten policy further. All officials unanimously agreed that it is not appropriate to cut rates until they have greater confidence in inflation falling to 2%.