WASHINGTON (Reuters) – Since the Federal Reserve decided to keep interest rates on hold at its June 13-14 policy meeting, U.S. central bank officials have given every indication they are ready to approve another small rate increase when they gather again next week.
But recent data suggesting inflation has begun to slow in a faster and more persistent way will likely intensify their debate over whether the coming move will be the last one needed, with policymakers honing in on the key issue of whether the economy has fully absorbed the impact of the aggressive monetary tightening to date or is only beginning to adjust.
In one case, more rate increases might be needed to ensure “disinflation” continues; in the other, weakened price pressures are already in the pipeline, and doing more could cause unnecessary damage to the economy and the job market.
Officials’ rhetoric has leaned towards further hikes beyond the July 25-26 meeting, when the Fed’s policy-setting committee is expected to raise the benchmark overnight interest rate by a quarter of a percentage point to the 5.25%-5.50% range.
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Source: www.reuters.com
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