Fed Minutes Show Caution About Moving Too Fast on Rate Cuts

More Federal Reserve officials are concerned about cutting interest rates too quickly than are worried about going too slowly, MarketWatch reported Wednesday, citing the minutes of the Fed’s late January policy meeting. As expected, the Fed held the line on the federal funds rate at that meeting, maintaining a range of 5.25% to 5.50%

“In discussing the policy outlook, participants judged that the policy rate was likely at its peak for this tightening cycle,” according to the minutes. However, “Participants generally noted that they did not expect it would be appropriate to reduce the target range for the federal funds rate until they had gained greater confidence that inflation was moving sustainably toward 2%.”

The tone of the minutes was one of caution toward inflation, although there had been progress over the past six months, reported MarketWatch. “Some participants noted the risks that progress toward price stability could stall,” the minutes said. Officials said there was uncertainty over how long a restrictive policy stance needed to be maintained.

MarketWatch reported that as of late February, traders in derivative markets see a 30% chance of a May cut in the benchmark interest rate and an 80% chance of one occurring in June. They see four quarter-point cuts by the end of the year, down from a projected six prior to the January meeting.

Connect

Inside The Story

Federal Reserve

About Paul Bubny

Paul Bubny serves as Senior Content Director for Connect Commercial Real Estate, a role to which he brings 16-plus years’ experience covering the commercial real estate industry and 30-plus years in business-to-business journalism. In this capacity, he oversees daily operations while also reporting on both local/regional markets and national trends, covering individual transactions across all property types, as well as delving into broader subject matter. He produces 7-10 daily news stories per day and works with the Connect team and clients to develop longer-form content, ranging from Q&As to thought-leadership pieces. Prior to joining Connect, Paul was Managing Editor for both Real Estate Forum and GlobeSt.com at American Lawyer Media, where he oversaw operations at both publications while also producing daily news and feature-length articles. His tenure in B2B publishing stretches back into the print era, and he has served as Editor in Chief on four national trade publications. Since 1999, Paul has volunteered as the newsletter editor of passenger rail advocacy groups (one national, one local).

Order Reprints