In the considerations for the last hike in the reference interest rate -75 basis points-, the committee participants considered that the labor market was “very tight”, as well as that inflation was “well above” the goal of 2 % average “and the short-term inflation outlook had deteriorated since the May meeting,” the minutes read.
In addition to interest rate increases, all committee members deemed it appropriate to continue reducing the size of the balance sheet, which went from 18% to 30% of US GDP (nearly $9 trillion).
The FOMC pointed out that the war in Ukraine continues to be a factor that can push up the price of energy and raw materials, while the armed conflict and the zero Covid-19 policy in China increases the risk of new disruptions in the chains production and supply.
Regarding upcoming monetary policy decisions, the members of the committee continue to anticipate that “continuous increases in the interest rate will be appropriate to achieve the objectives of the committee.”
In particular, the minutes indicate, the participants consider that an increase of 50 or 75 basis points will be appropriate at their next meeting.
Likewise, they consider that the economic outlook calls for a “restrictive policy” and recognized the possibility of an “even more restrictive” stance if inflationary pressures persist.