Federal policymakers remain hopeful that inflation will keep declining – FOMC minutes reveal

The minutes from the US Federal Reserve’s April 30 / May 1 FOMC policy meeting indicate that policymakers expect price pressures to continue easing, moving towards the 2% target in the coming months.

Recent inflation data released after the policy meeting showed further easing in consumer prices, reinforcing the central bankers’ hopes that the worst of inflation is over.

However, Fed officials expressed concerns about whether the current interest rate level is sufficient to maintain the downward trajectory of inflation. They left open the possibility of further rate hikes if the overall situation worsens, despite recent comments from Fed Chair Powell suggesting that additional rate hikes are unlikely.

The US central bank has maintained its policy rate at 5.00%-5.25% during the past few meetings in response to recent inflation upticks, signaling that the Fed’s mission to fully control inflation is not yet complete. Nevertheless, policymakers remain optimistic that inflation will reach the target over the medium term.

Adding to the positive outlook is the overall resilience of the US economy, which has weathered high interest rates better than expected. Positive developments in the labor market further brighten the economic picture.

Overall, there is a more optimistic tone in the latest comments, though all options remain open. This suggests that the Fed may delay the start of its monetary policy easing, which has already been postponed twice from the initial expectations of the first rate cut in March this year.