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Fed officials are uncertain on whether more rate hikes are needed, minutes show
The Fed minutes showed “uncertainty” from participants about whether to increase rates for an 11th time at its June meeting.
There appeared to be two camps in the Fed now, according to the minutes. One group that contained “some” members judged that progress in reducing inflation was “unacceptably slow” and would necessitate further hikes. The other, backed by “several” FOMC members, saw slowing economic growth in which “further policy firming after this meeting may not be necessary.”
The minutes do not identify individual members nor do they quantify “some” or “several” with specific numbers. However, in Fed parlance, “some” is thought to be more than “several.”
Bottom line, the minutes showed the Fed would be closely watching the incoming data to decide whether to hike rates again on June 14.
— Jeff Cox, John Melloy
Correction: In Fed parlance, “some” is thought to be more than “several.” An earlier version misstated the difference.
Fed’s Waller stresses ‘flexibility’ for June rate decision
Addressing a three-pronged question facing U.S. central bankers, Federal Reserve Governor Christopher Waller said it’s just too soon to tell which choice is correct. Data in the coming weeks before the June 13-14 meeting will determine which is the proper path, he said.
While Waller insisted the Fed will need to “maintain flexibility” on whether it should hike, pause or skip June with an inclination to increase rates in July, he did express doubt that the Fed has gone as far as it needs in the fight against inflation.
“I do not expect the data coming in over the next couple of months will make it clear that we have reached the terminal rate,” Waller said in prepared remarks for a speech in Santa Barbara, Calif.
“And I do not support stopping rate hikes unless we get clear evidence that inflation is moving down towards our 2% objective. But whether we should hike or skip at the June meeting will depend on how the data come in over the next three weeks,” he added.
— Jeff Cox
House Speaker McCarthy reiterates confidence in averting a default
House Speaker Kevin McCarthy reiterated that negotiators should reach a resolution on the debt ceiling even as lawmakers struggle to agree on baseline spending.
“We’re not going to default,” he said during a press conference Wednesday. “We’re going to solve this problem. I will stay with it until we can get it done. But let’s be honest about this. We had to spend less than we spent last year. It is not my fault that the Democrats cannot give up on their spending.”
— Samantha Subin, Sarah Min
Negotiators reconvening Wednesday morning
Negotiators for both sides of the debt ceiling talks were expected to meet again on Wednesday morning, Reuters reported, citing a source familiar.
Stocks fell on Tuesday after negotiators for President Joe Biden and House Speaker Kevin McCarthy appeared to not make significant progress in talks that day.
It could take a week to write any deal and pass it through Congress, the Reuters report stated, raising the stakes to reach an agreement in the next couple days ahead of a June 1 deadline for default from the Treasury.
— John Melloy
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