The minutes of the Fed's meeting at the end of January 2024 released showed thatUntil there is more confidence that inflation is moving towards 2% on a sustained basis, a rate cut is not appropriate; Majority** pointed to the risk of cutting rates too quickly; Some** have pointed out that maintaining an excessively restrictive stance for a long time would pose downside risks to the economy.
Regarding inflation, the Fed** noted that inflation has eased over the past year, but remains above its 2% inflation target. The Fed** remains concerned that rising inflation continues to hurt households, especially those who cannot afford to be more qualified. While inflation data shows a significant decline in inflation in the second half of 2023, the Fed** will carefully evaluate the data received to determine whether inflation continues to fall to 2%.
The Fed** noted that consumer spending was stronger than expected, supported by low unemployment and steady income growth。Some Feds** have judged that consumption growth is likely to slow in 2024 as labor income growth is expected to slow and COVID-related excess savings are expected to decrease. In addition, some Feds** have noted that there are signs that some households, especially low- and middle-income households, are under increasing pressure on their finances, which they see as a downside risk to the outlook for consumption. In particular, they noted an increase in the use of credit card revolving balances and buy now, pay later services, as well as an increase in delinquency rates for certain types of consumer loans.
The Fed** said that the labor market remains tight, but that supply and demand continue to balance in the market. In the final months of 2023, wage growth remains strong, albeit at a slower pace than a year ago, while the unemployment rate remains low. The Fed** observed that the ratio of job openings to unemployed workers has declined over the past year, but remains slightly above pre-pandemic levels. In line with the easing of labor market tightness, businesses in some regions reported an easing of wage pressures or an increased ability to hire and retain workers.
However, some Feds** believe that further increases in the labor force may be limited, such as the decline in the labor force participation rate in December. While labor market conditions are generally seen as strong, some Feds** have noted that recent job growth has been concentrated in a handful of sectors, suggesting downside risks to the employment outlook.
When discussing the policy outlook, the Fed** judged that interest rates could be at the peak of this tightening cycle. They generally believe that before they are more confident that inflation is moving towards 2% on a sustained basisLowering interest rates is not appropriate.
The Fed** said that while the risks of achieving the employment and inflation targets are moving towards a better balance, inflation risks remain highly focused. They believe that the upside risks to inflation have abated, but inflation remains above the long-term target. The Fed** highlighted the uncertainty of how long the restrictive monetary policy stance will need to be maintained. Most Feds** pointed to the risk of cutting rates too quickly and stressed the importance of carefully evaluating incoming data to determine whether inflation can sustainably fall to 2%. However, some Feds** have pointed out that maintaining an excessively restrictive stance for a long time would pose downside risks to the economy.
* |Sino-Singapore warp and weft.
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This issue is edited by Zhong Hailing.
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