While market watchers have jumped at the possibi💦lity of upcoming rate cuts, new documents show uncertainty among some Federal Reserve offi💝cials who may not be quick to lower interest rates in 2024.

The Federal Open Market Committee minutes from its Dec. 12-13 meeting showed “almost all” of the meeting participants believed the federal funds rate would be brought lower in 2024. However, there is an “unusually elevated degree of uncertainty” on how t𒊎o get there, the meeting notes said. Some members believe it may be necessary to keep rates higher, or even raise them again, to bring inflation down to the Federal Reserve’s target rate of 2%.

After the Federal Reserve kept interest rates at the current level of 5.25% to 5.5% during the December meeting, Chair Jerome Powell delivered comments signaling the central bank could 澳洲幸运5官方开奖结果体彩网:cut rates in 2024, sending markets higher.

Inflation has fallen from the highs of 2022, and indicator that the Fed's rate hikes are having their desired effect. However, it still 澳洲幸运5官方开奖结果体彩网:sits at 2.6%, above the Fed’s target. 

The minutes notes showed there was still some division among the members about whether it was time to cut rates. In remarks to the Raleigh Chamber of Commerce on Wednesday, 澳洲幸运5官方开奖结果体彩网:Richmond Fed President Tom Barkin said the committee members forecast there would be anywhere from no rate cuts up to as many as six over this year.

“Today’s Fed meeting minutes were another attempt by the Fed to walk back some of the overly-dovish interpretation of the December FOMC meeting,” said Charlie Ripley, senior investment strategist for Allianz Investment Management. “At the end of the day, the Fed believes market conditions may have gotten ahead of themselves."

Barkin: Soft Landing Conc🌌eivable, But Not📖 Inevitable

Barkin said that a “soft landing” for the economy where inflation returns to around 2% without an economic slowdown is “increasingly coཧnceivable but in no way inevitable.”

There is a risk that high interest rates may stillꦗ force consumers and businesses to pull back on spending, creating an economic slowdown leading to the “hard landing” that Fed officials are seeking to avoid. Similarly, the U.S. economy could have “no landing,” as the strong labor market could keep consumer spending at robust levels.

“♊While you might think this would be a first-class problem, strong demand isn’t the solution to above-target inflation,” Barkin said. “That’s why the potential for additional rate hikes remains on the table.”

If inflation doesn’t cool to 2%, the FOMC minute🌺s showed some believed a tradeoff was needed and suggested setting the target inflation goal higher. This would allow the central bank to cut rates sooner and stave off potential economic harm.

Barkin said that would be a mistake. 

“Credibility is the Fed’s key asset. Changing the target before reaching it risks that credibility,” he said.