Fed officials support one or more 50 bp hikes in future: Minutes

ANKARA

The US Federal Reserve officials support one or more 50 basis point interest rate hikes at future meetings if inflation remains high or keeps climbing, according to minutes released on Wednesday.

The Federal Open Market Committee on March 16 increased its benchmark interest rate by 25 basis points, marking its first rate hike since late 2018.

Many participants of the committee said that they would have preferred a 50 basis point increase at the March meeting due to the record high inflation, said the minutes from the meeting.

It, however, added: "In light of greater near-term uncertainty associated with Russia’s invasion of Ukraine, they judged that a 25 basis point increase would be appropriate at this meeting."

US consumer inflation soared 7.9% in February from the same month last year, marking its steepest annual increase in more than 40 years.

"Notwithstanding uncertainties associated with geopolitical developments, many central banks continued to signal intentions to move ahead with reducing policy accommodation to address elevated inflation," the minutes said.

All committee participants also agreed that elevated inflation and tight labor market conditions "warranted commencement of balance sheet runoff at a coming meeting, with a faster pace of decline in securities holdings," it added.

The Federal Reserve minutes also showed that the central bank will start reducing its massive holdings around $95 billion per month.

Monthly caps of about $60 billion for Treasury securities and about $35 billion for agency mortgage-backed securities would likely be appropriate, said the minutes.